Comprehensive Exercise to Calculate Variances

1. Comprehensive exercise to calculate variances:
Gilder Corporation makes a product with the following standard costs:

The company reported the following results concerning this product in June.

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. Required:

a. Compute the materials quantity variance. 15,600 F
b. Compute the materials price variance. 44,100 * 0.1 = 4,410 F
c. Compute the labor efficiency variance. 16 * (510 – (5,500 *0.1)) = 640 F
d. Compute the labor rate variance. 7,803 – (510 * 16) = 357 F
e. Compute the variable overhead efficiency variance. 6 * (510 – (5,500 * 0.1)) = 240 F
f. Compute the variable overhead rate variance. 2,754 – (510 * 6) = 306 F
a).

the materials quantity variance = $15,600 F

b).
The materials price variance is: $4,410 F

c).
The labor efficiency variance is: $640 F

d).
The labor rate variance is:
$357 F

e).
The variable overhead efficiency variance is: $240 F

f). The variable overhead rate variance is:
$306 F

2.
The Hanson Corporation employs a standard costing system. The following data are available for February:

What is the actual direct labor rate for February:

AR = $7.60 per hour

6,500 * 8 = 52,000
52,000 – 2,600 = 49,400
49,400 / 6,500 = 7.6

3.
The Swenson Corporation has a standard costing system. The following data are available for June:

What is the actual price per pound of direct materials purchased in June?

AP = $4.20 per pound

35,000 * x
35,000 * 4 = 140,000 x * 4
140,000 – 4,200 = 135,800 / 4 = 33,950
140,000 + 7,000 = 147,000 / 35,000