Wage Rate per Hour $16.00 $17.00
Fixed Hours 320 320
Variable Hours per Relative
Value Unit (RVU) 1.0 1.1
Relative Value Units (RVUs) 1,000 1,200
Total Labor Hours 1,320 1,640
Labor Costs $21,120 $27,880
Cost per RVU $21.12 $23.23
Budgeted costs at actual volume would be $25,344 ($21.12 � 1,200), and the total variance to be explained is $2,536 Unfavorable ($27,880 � $25,344). Be sure to specify whether the variance is favorable or unfavorable.
1. What is the amount of variance that is attributed to the difference between the budgeted and actual wage rate per hour?
2. What is the amount of variance that is attributed to the change in labor productivity?
3. What is the amount of variance that can be attributed to the difference between budgeted and actual volume?
Wage Rate per Hour $16.00 $17.00
Fixed Hours 320 320
Variable Hours per Relative
Value Unit (RVU) 1.0 1.1
Relative Value Units (RVUs) 1,000 1,200
Total Labor Hours 1,320 1,640
Labor Costs $21,120 $27,880
Cost per RVU $21.12 $23.23
Budgeted costs at actual volume would be $25,344 ($21.12 � 1,200), and the total variance to be explained is $2,536 Unfavorable ($27,880 � $25,344). Be sure to specify whether the variance is favorable or unfavorable.
1. What is the amount of variance that is attributed to the difference between the budgeted and actual wage rate per hour?
2. What is the amount of variance that is attributed to the change in labor productivity?
3. What is the amount of variance that can be attributed to the difference between budgeted and actual volume?
Unlock all answers
Related questions
| [The following information applies to the questions displayed below.] |
| Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: |
| Direct material: 6 pounds at $9.00 per pound | $ | 54.00 |
| Direct labor: 5 hours at $13.00 per hour | 65.00 | |
| Variable overhead: 5 hours at $3.00 per hour | 15.00 | |
| Total standard variable cost per unit | $ | 134.00 |
| The company also established the following cost formulas for its selling expenses: |
| Fixed Cost per Month | Variable Cost per Unit Sold | |||||
| Advertising | $ | 260,000 | ||||
| Sales salaries and commissions | $ | 120,000 | $ | 11.00 | ||
| Shipping expenses | $ | 4.00 | ||||
| The planning budget for March was based on producing and selling 20,000 units. However, during March the company actually produced and sold 25,000 units and incurred the following costs: |
| a. | Purchased 180,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production. |
| b. | Direct-laborers worked 115,000 hours at a rate of $14.00 per hour. |
| c. | Total variable manufacturing overhead for the month was $350,250. |
| d. | Total advertising, sales salaries and commissions, and shipping expenses were $267,000, $350,750, and $105,000, respectively. |
1. What raw materials cost would be included in the companyâs flexible budget for March?
2. What is the materials quantity variance for March? (Input the amount as a positive value. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).)
3.What is the materials price variance for March? (Input the amount as a positive value. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).)
4. If Preble had purchased 185,000 pounds of materials at $8 per pound and used 180,000 pounds in production, what would be the materials quantity variance for March? (Input the amount as a positive value. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.).)
