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Calculating Variances

During the week ending on August 6th, the following activity took place:
- 2390 machine hrs were worked
- 11400lbs of raw materials were purchased for inventory at a total cost of $70,680
- 3,800 cases of finished products were produced
- 6,720 labor hrs were worked at an average rate of $12.25 per hr
- $8,126 actual variable overhead costs were incurred.

Calculate each of the following variances and explain the equation on how you got the variance.

a. price variance for raw materials purchased
b. raw materials usage variance
c. direct labor rate variance
d. direct labor efficiency variance
e. variable overhead spending variance
f. Variable overhead efficiency variance.

Solution Preview

Hello,

a.
Raw materials purchase price variance:
(Standard price - Actual price) ×Actual quantity purchased
($6.00 - ($70,680 / 11,400 pounds)) × 11,400 pounds =
($6.00 - $6.20) × 11,400
= $2,280 U

b.
Raw materials usage variance:
(Standard usage - Actual usage) ...

Solution Summary

This solution provides steps to calculate the given variances.

$2.19