Coca-Cola manufactures two products, Coke and Sprite. The company prepares its master budget on the basis of
standard costs. The following data are for June:
STANDARDS
Direct Materials
Coke
Sprite
3 ounces at $15 per ounce per unit 4 ounces at $16.50 per ounce
Direct Labor
5 hours at $60 per hour
6 hours at $75 per hour
Variable Overhead (per direct labor
$48
$52.50
hour)
Fixed Overhead (per month)
$335,340
$397,800
Expected activity (direct labor-hours) 5,750
7,800
ACTUAL RESULTS
Direct material (purchased and used) 3,100 ounces at $13.50 per ounce 4,700 ounces at $17.25 per ounce
Direct Labor
4,900 hours at $60.75
7,400 hours at $76.50 per hour
Variable Overhead
$242,550
$378,510
Fixed Overhead
$313,950
$396,000
Units produced (actual)
1,000 units
1,200 units
For the month of June, compute the following variances (show your computation) and indicate whether favorable (F)
or unfavorable (U) for both products:
A. Direct materials price variance (exhibit 7-3)
B. Direct materials efficiency variance (exhibit 7-3)
C. Direct labor price variance (exhibit 7-3)
D. Direct labor efficiency variance (exhibit 7-3)
E. Variable overhead spending variance (exhibit 8-1)
F. Variable overhead efficiency variance (exhibit 8-1)
G. Fixed overhead spending variance (exhibit 8-2)
H. Production volume variance (exhibit 8-2)