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
Overhead incurred:
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.
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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.
Purchase this Solution
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