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5 September, 17:56

Budgeted sales price is $10, actual is $12.

Budgeted sales volume is 2,500 units, actual is 2,400 units.

Budgeted input prices are $4/pound for DM and $15/hour for DL, actual is $4.50/pound for DM and $14/hour for DL.

Budgeted amounts of inputs are 0.5 pounds of DM and 0.2 hours of DL per unit of output. Actual amounts are 0.45 pounds of DM and 0.19 hours of DL per unit of output.

Budgeted fixed costs are $22,000, actual $23,000.

Required:

Which of the following variances are favorable / unfavorable (use common sense rather than computations) :

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Answers (1)
  1. 5 September, 18:17
    0
    Instructions are listed below.

    Explanation:

    Giving the following information:

    The budgeted sales price is $10, actual is $12.

    The budgeted sales volume is 2,500 units, actual is 2,400 units.

    Budgeted input prices are $4/pound for DM and $15/hour for DL, actual is $4.50/pound for DM and $14/hour for DL.

    Budgeted amounts of inputs are 0.5 pounds of DM and 0.2 hours of DL per unit of output. Actual amounts are 0.45 pounds of DM and 0.19 hours of DL per unit of output.

    Budgeted fixed costs are $22,000, actual $23,000

    Direct material price variance = (standard price - actual price) * actual quantity

    Direct material price variance = (4 - 4.5) * 1080 = 540 unfavorable

    Direct material quantity variance = (standard quantity - actual quantity) * standard price

    Direct material quantity variance = (1200 - 1080) * 4 = 480 favorable

    Direct labor efficiency variance = (SQ - AQ) * standard rate

    Direct labor efficiency variance = (480 - 456) * 15 = 360 favorable

    Direct labor price variance = (SR - AR) * AQ

    Direct labor price variance = (15 - 14) * 456 = 456 favorable

    Overhead variance = 22,000 - 23,000 = 1000 unfavorable
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