What is the manufacturing overhead efficiency variance?
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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- The following product costs are available for Kellee Company on the production of eyeglass frames: direct materials, $32,125; direct labor, $23.50; manufacturing overhead, applied at 225% of direct labor cost; selling expenses, $22,225; and administrative expenses, $31,125. The direct labor hours worked for the month are 3,200 hours. A. What are the prime costs? B. What are the conversion costs? C. What is the total product cost? D. What is the total period cost? E. If 6.425 equivalent units are produced, what is the equivalent material cost per unit? F. What is the equivalent conversion cost per unit?The following product Costs are available for Haworth Company on the production of chairs: direct materials, $15,500; direct labor, $22.000; manufacturing overhead, $16.500; selling expenses, $6,900; and administrative expenses, $15,200. What are the prime costs? What are the conversion costs? What is the total product cost? What is the total period cost? If 7,750 equivalent units are produced, what is the equivalent material cost per unit? If 22,000 equivalent units are produced, what is the equivalent conversion cost per unit?Wrappers Tape makes two products: Simple and Removable. It estimates it will produce 369,991 units of Simple and 146,100 of Removable, and the overhead for each of its cost pools is as follows: It has also estimated the activities for each cost driver as follows: Â How much is the overhead allocated to each unit of Simple and Removable?
- Wilson Corporation manufactures a single product. The standard cost per unit of product is shown below. Direct materials—1 pound plastic at $7.00 per pound $ 7.00 Direct labor—1.6 hours at $12.00 per hour 19.20 Variable manufacturing overhead 12.00 Fixed manufacturing overhead 4.00 Total standard cost per unit $42.20 The predetermined manufacturing overhead rate is $10.00 per direct labor hour ($16.00 ÷ 1.6). It was computed from a master manufacturing overhead budget based on normal production of 8,000 direct labor hours (5,000 units) for the month. The master budget showed total variable costs of $60,000 ($7.50 per hour) and total fixed overhead costs of $20,000 ($2.50 per hour). Actual costs for October in producing 4,800 units were as follows. Direct materials (5,100 pounds) $ 36,720 Direct labor (7,400 hours) 92,500 Variable overhead 59,700 Fixed overhead 21,000 Total manufacturing costs $209,920 The purchasing department…Bonita’s standard quantities for 1 unit of product include 3 pounds of materials and 1.0 labor hours. The standard rates are $5 per pound and $5 per hour. The standard overhead rate is $6 per direct labor hour. The total standard cost per unit of Bonita’s product is a. $26.00. b. $11.00. c. $16.00. d. $20.00.Stevens Corporation manufactures a single product. The standard cost per unit of product is shown below. Direct materials—1 pound plastic at $7.00 per pound $ 7.00 Direct labor—1.6 hours at $12.00 per hour 19.20 Variable manufacturing overhead 12.00 Fixed manufacturing overhead 4.00 Total standard cost per unit $42.20 The predetermined manufacturing overhead rate is $10.00 per direct labor hour ($16.00 ÷ 1.6). It was computed from a master manufacturing overhead budget based on normal production of 8,000 direct labor hours (5,000 units) for the month. The master budget showed total variable costs of $60,000 ($7.50 per hour) and total fixed overhead costs of $20,000 ($2.50 per hour). Actual costs for October in producing 4,800 units were as follows. Direct materials (5,100 pounds) $ 36,720 Direct labor (7,400 hours) 92,500 Variable overhead 59,700 Fixed overhead 21,000 Total manufacturing costs $209,920 The purchasing department…
- Rogen Corporation manufactures a single product. The standard cost per unit of product is shown below. Direct materials—1 pound plastic at $6.00 per pound $ 6.00 Direct labor—2.0 hours at $12.20 per hour 24.40 Variable manufacturing overhead 15.00 Fixed manufacturing overhead 13.00 Total standard cost per unit $58.40 The predetermined manufacturing overhead rate is $14.00 per direct labor hour ($28.00 ÷ 2.0). It was computed from a master manufacturing overhead budget based on normal production of 10,000 direct labor hours (5,000 units) for the month. The master budget showed total variable costs of $75,000 ($7.50 per hour) and total fixed overhead costs of $65,000 ($6.50 per hour). Actual costs for October in producing 3,400 units were as follows. Direct materials (3,600 pounds) $ 22,320 Direct labor (6,650 hours) 83,790 Variable overhead 66,638 Fixed overhead 30,462 Total manufacturing costs $203,210 The purchasing department…Rogen Corporation manufactures a single product. The standard cost per unit of product is shown below. Direct materials—1 pound plastic at $8.00 per pound $ 8.00 Direct labor—1.5 hours at $11.90 per hour 17.85 Variable manufacturing overhead 9.75 Fixed manufacturing overhead 11.25 Total standard cost per unit $46.85 The predetermined manufacturing overhead rate is $14.00 per direct labor hour ($21.00 ÷ 1.5). It was computed from a master manufacturing overhead budget based on normal production of 8,250 direct labor hours (5,500 units) for the month. The master budget showed total variable costs of $53,625 ($6.50 per hour) and total fixed overhead costs of $61,875 ($7.50 per hour). Actual costs for October in producing 4,200 units were as follows. Direct materials (4,380 pounds) $ 35,478 Direct labor (6,190 hours) 75,518 Variable overhead 67,030 Fixed overhead 23,170 Total manufacturing costs $201,196 The purchasing department buys…Bramble's standard quantities for 1 unit of product include 3 pounds of materials and 1.0 labor hours. The standard rates are $3 per pound and $5 per hour. The standard overhead rate is $10 per direct labor hour. The total standard cost per unit of Bramble's product is O $24.00. O $18.00. O $15.00. O $14.00.
- The standard costs and actual costs for direct materials for the manufacture of 3,000 actual units of product are Actual Material price per pound of direct material Quantity of material in pound per unit of product Actual production untis of product BDMOV (AQ SQ) for Actual Production x SP C DMCV DMPV + DMOV Actual cost per unit of product (AC) Standard costs per unit of product (SC) $8.00 Alternate formula to compute DMCV= (Actual cost-standard cost) per unit x # of units 065 3,000 Required: Compute the followings variances and indicate if they are favorable (F) or unfavorable (UF) A. Direct material Price variance (DMPV) B. Direct matenal Quantity variance (DMQV) C. Total Direct material Cost variance (DMCV) Solution: A.DMPV = (AP-SP) x AQ for Actual Production Standard Variance $ For UF ($1,462 50) F ($5,250.00) F AQ $8.75 SQ 0.45 ($6.712 50) F 1950 1350 Acronyms: AP Actual price per unit of Material SP Standard price per unit of Material AQ-Actual quantity of Material for Actual…The standard cost sheet for a product is shown. Standard Cost Manufacturing Costs Standard price Standard Quantity per unit Direct materials $4.50 per pound 5.70 pounds $ 25.65 Direct labor $11.87 per hour 2.00 hours $ 23.74 Overhead $2.20 per hour 2.00 hours $ 4.40 $ 53.79 The company produced 3,000 units that required: 17,600 pounds of material purchased at $4.35 per pound • 5,910 hours of labor at an hourly rate of $12.17 per hour • Actual overhead in the period was $13,540 Fill in the Budget Performance Report for the period. Some amounts are provided. Round your answers to the ne Budget Performance Report Variance Manufacturing Costs: Actual Standard (Favorable)/ 3,000 units Costs Costs Unfavorable Direct materials $76,560 Direct labor 71,220 Overhead 13,540 $655Gilder Corporation makes a product with the following standard costs: Standard Quantity or Hours 7.6 grams 0.1 hours 0.1 hours Direct materials. Direct labor. Variable overhead.. Actual direct labor-hours.... Actual cost of raw materials purchases.. Actual direct labor cost.... Actual variable overhead cost. Standard Price or Rate Standard Cost Per Unit $6.00 per gram $16.00 per hour $6.00 per hour The company reported the following results concerning this product in June. Originally budgeted output.. Actual output... 5,400 units 5,500 units 39,200 grams 44,100 grams Raw materials used in production Purchases of raw materials 510 hours $260, 190 $240 U $216 U $240 F $216 F $7,803 $2,754 $45.60 $1.60 $0.60 The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The variable overhead efficiency variance for June is: