Question

During March the laboratory performed 2,000 core tests. The following events occurred during March: 8,600 pounds of sand were purchased at a cost of $7,310. 7,200 pounds of sand were used for core tests. 840 actual direct labor hours were worked at a cost of $8,610. The direct material usage variance for March is: A. $900 favorable B. $1,950 favorable C. $1,950 unfavorable D. $900 unfavorable

Answer 1

Solution:

1. The materials price variance for March

Price Variance [.85 *8,600 lbs= $7310 ) - $.75*8,600 lbs =$6,450 ]

The materials price variance for March is $860 U

2. The materials quantity variance for March is:

Quantity Variance $75*7200=$5,400 - $.75 *(3x2000)=$4,500

The materials quantity variance for March is = $900 U

3.The labor rate variance for March is: actual cost $8,610 - $12*840 hrs = $10,080

The rate variance for March = -$1,470 F

4.The labor efficiency variance for March is:[$12* 840 hrs = $10,080) - $12*(.4*2000) hrs = $9,600]

Labor efficiency variance $10,080-$9,600= $480 u

CHASE

ADD 36000+20,000 24,000+16,000=96,000

96,000/40,000

2.4 HOURS PER UNIT

7. 42,000 * 3.6 = 151,200

8. 8 40,000 X 3.6 - 42,000 X 3.6

144,000 - 151,200 = 7,200 F15/

5. The variable overhead efficiency variance for March is:

Spending variance ($9 p/hr*840 hrs = $7,560) - ($9 p/hr *(.4 *2000 test total) =$7,200)

Efficiency variance for March $7,560-$7,200=$3609.

The average operating assets amounted to:

Turnover = Sales ¸ Average operating assets

Average operating assets = Sales / Turnover= $900,000 / 1.5 = $600,000