Question

1. Spencer Company manufactures a single product that has a standard materials cost of $40 (2 units of materials at $20 per unit), standard direct labor cost of $15 (2 hour per unit), and standard variable overhead cost of $7 (based on direct labor hours). Fixed overhead is budgeted at $25,000 per month. The following data pertain to operations for May 2014: Materials purchased: Materials used in production of 5,000 units of finished product: Direct labor used: Variable overhead costs incurred: Fixed overhead costs incurred: Required: (each item worth 5 points) Compute the following variances (show calculations): 1. Materials usage variance 2. Labor rate variance 3. Labor efficiency variance 4. Variable overhead spending variance 5. Variable overhead efficiency variance 6. Fixed overhead budget variance 11,000 units costing $214,500 10,500 units of materials 9,500 hours costing $143,450 $66,000 $25,800

          1.
Spencer Company manufactures a single product that has a standard materials cost of $40 (2 units of
materials at $20 per unit), standard direct labor cost of $15 (2 hour per unit), and standard variable
overhead cost of $7 (based on direct labor hours). Fixed overhead is budgeted at $25,000 per month.
The following data pertain to operations for May 2014:
Materials purchased:
Materials used in production of 5,000 units of finished
product:
Direct labor used:
Variable overhead costs incurred:
Fixed overhead costs incurred:
Required: (each item worth 5 points)
Compute the following variances (show calculations):
1. Materials usage variance
2. Labor rate variance
3. Labor efficiency variance
4. Variable overhead spending variance
5. Variable overhead efficiency variance
6. Fixed overhead budget variance
11,000 units costing $214,500
10,500 units of materials
9,500 hours costing $143,450
$66,000
$25,800

1.
Spencer Company manufactures a single product that has a standard materials cost of 40 (2 units of
materials at20 per unit), standard direct labor cost of 15 (2 hour per unit), and standard variable
overhead cost of7 (based on direct labor hours). Fixed overhead is budgeted at 25,000 per month.
The following data pertain to operations for May 2014:
Materials purchased:
Materials used in production of 5,000 units of finished
product:
Direct labor used:
Variable overhead costs incurred:
Fixed overhead costs incurred:
Required: (each item worth 5 points)
Compute the following variances (show calculations):
1. Materials usage variance
2. Labor rate variance
3. Labor efficiency variance
4. Variable overhead spending variance
5. Variable overhead efficiency variance
6. Fixed overhead budget variance
11,000 units costing214,500
10,500 units of materials
9,500 hours costing 143,45066,000
25,800

Added by Dana A.

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