ACCT 331Exercise Chapter 7

Problem 1. Direct Cost Variances

Cost standards for product no. C77:Direct material 3 kgs at $2.50 per kg $ 7.50Direct labor 5 hours at $7.50 per hour 37.50

Actual results:Units produced 7,800 unitsDirect material purchased 26,000 kgs at $2.70 $ 70,200Direct material used 23,100 kgs at $2.70 62,370Direct labor 40,100 hours at $7.30 292,730

The production manager is interested to know about cost variances given the above production data. You are a managerial accountant and the manager asks you to help him find the information and to determine if the variance is favorable or unfavorable. The following is the list of information the manager needs.

a. Direct material price variance. b. Direct material quantity variance.c. Direct labor rate variance. d. Direct labor efficiency variance.

Problem 2. Overhead Variance. Atherton Company uses a four-way analysis for overhead. The following information is available for August for overhead:

   

Required:Compute the four variances associated with the use of overhead costs.