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# Managerial Accounting for CH Industries - Variance analysis

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The following standard costs were developed for one of the products of CH Industries:

STANDARD COST CARD
PER UNIT

Direct materials: 3 x \$3 per pound \$9.00
Direct labor: 1.5 hours x \$18 per hour 27.00
Variable overhead: 1.5 hours x \$4 per hour 6.00
Fixed overhead: 1.5 hours x \$7.50 per hour 11.25
Total standard cost per unit \$53.25

The following information is available regarding the company's operations for the period:
Units produced 375,000
Materials purchased 1,500,000 Pounds \$3.10 per pound
Materials used 1,100,000 Pounds
Direct labor 565,000 hours \$ 18.10 per hour
Variable \$2,210,000
Fixed \$3,600,000

Budgeted fixed overhead for the period is \$3,750,000.

Required:
a. Calculate the materials price variance and material usage variance; indicate whether it is favorable or unfavorable.
b. Calculate the labor rate variance and labor efficiency variance; indicate whether it is favorable or unfavorable.
c. Calculate the variable overhead spending variance and variable overhead efficiency variance ; indicate whether it is favorable or unfavorable.
d. Calculate the fixed overhead spending variance and the fixed overhead volume variance; indicate whether it is favorable or unfavorable.

#### Solution Summary

Calculation the materials price variance and material usage variance; indication of whether it is favorable or unfavorable
Calculation the labor rate variance and labor efficiency variance; indication of whether it is favorable or unfavorable.
Calculation the variable overhead spending variance and variable overhead efficiency variance ; indication of whether it is favorable or unfavorable.
Calculation of fixed overhead spending variance and the fixed overhead volume variance; indication of whether it is favorable or unfavorable.

\$2.19