Question

Barberry, Inc., manufactures a product called Fruta. The company uses a standard cost system and has established the following standards for one unit of Fruta:

Standard Quantity Standard Price
or Rate Standard Cost
Direct materials 1.5 pounds $ 6.00 per pound $ 9.00
Direct labor 0.6 hours $ 12.00 per hour 7.20
Variable manufacturing overhead 0.6 hours $ 2.50 per hour 1.50
$ 17.70
During June, the company recorded this activity related to the production of Fruta:
a.The company produced 3,000 units during June.
b.A total of 8,000 pounds of material were purchased at a cost of $46,000.
c.There was no beginning inventory of materials; however, at the end of the month, 2,000 pounds of material remained in ending inventory.
d.The company employs 10 persons to work on the production of Fruta. During June, they worked an average of 160 hours at an average rate of $12.50 per hour.
e.Variable manufacturing overhead is assigned to Fruta on the basis of direct labor-hours. Variable manufacturing overhead costs during June totaled $3,600.

Answer 1

Materials:

P 2,000F

Q 7,650U

Labor:

Rate 800U

Efficiency 2,500.00F

Questions:

Solve for labor and materials variances

Step-by-step explanation:

`(standard\:cost-actual\:cost) * actual \: quantity= DM \: price \: variance`

std cost $6.00

actual cost $5.75 ($46,000/ 8,000 pounds)

quantity 8,000

difference $0.25

price variance $2,000.00

`(standard\:quantity-actual\:quantity) * standard \: cost = DM \: quantity \: variance`

std quantity 4500.00 (3,000 units x 1.5 pounds per unit)

actual quantity 6000.00 (8,000 purchased - 2,000 ending)

std cost $5.10

difference -1500.00

quantity variance $(7,650.00)

DIRECT labor VARIANCES

`(standard\:rate-actual\:rate) * actual \: hours = DL \: rate \: variance`

std rate $12.00

actual rate $12.50

actual hours 1,600 (160 hours x 10 employees)

difference $(0.50)

rate variance $(800.00)

`(standard\:hours-actual\:hours) * standard \: rate = DL \: efficiency \: variance`

std hours 1800.00 (3000 units x 0.6hours per unit)

actual hours 1600.00

std rate $12.50

difference 200.00

efficiency variance $2,500.00