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    P10-14 Vitalite, Inc. Comprehensive Variance Analysis

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    Vitalite, Inc., produces a number of products, including a body- wrap kit. Standard variable costs relating to a single kit are given below:

    Standard Quantity Standard Price Standard
    or Hours or Rate Cost
    Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . ? $ 6 per yard $ ?
    Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ? ? ?
    Variable manufacturing overhead . . . . . . . . . . . . ? $ 2 per direct ?
    labor- hour
    Total standard cost per kit . . . . . . . . . . . . . . . . . . $ 42

    During August, 500 kits were manufactured and sold. Selected information relating to the month's production is given below:

    Variable
    Materials Direct Manufacturing
    Used Labor Overhead

    Total standard cost* . . . . . . . . . . . . . . . . . . ? $ 8,000 $ 1,600
    Actual costs incurred . . . . . . . . . . . . . . . . . $ 10,000 ? $ 1,620
    Materials price variance . . . . . . . . . . . . . . . ?
    Materials quantity variance . . . . . . . . . . . . . $ 600 U
    Labor rate variance . . . . . . . . . . . . . . . . . . . ?
    Labor efficiency variance . . . . . . . . . . . . . . ?
    Variable overhead rate variance . . . . . . . . . ?
    Variable overhead efficiency variance . . . . . ?
    -----------------------
    *For the month's production.

    The following additional information is available for August's production of kits:

    Actual direct labor- hours . . . . . . . . . . . . . . . . . . . .900
    Difference between standard and actual cost per kit produced during August . . . . . . . . . . . . . . . . . . . . $ 0.14 U

    Required:
    1. What was the total standard cost of the materials used during August?
    2. How many yards of material are required at standard per kit?
    3. What was the materials price variance for August if there were no beginning or ending inventories of materials?
    4. What is the standard direct labor rate per hour?
    5. What was the labor rate variance for August? The labor efficiency variance?
    6. What was the variable overhead rate variance for August? The variable overhead efficiency variance?
    7. Complete the standard cost card for one kit shown at the beginning of the problem.

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    Solution Summary

    Your tutorial is attached with all the flags indicating "correct." I have included a "chart" to show how I solved for all this and then inserted my findings into the spreadsheet. This is fairly advanced and so is not suitable for a beginning without a basic understanding of variances.

    $2.19

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