Variances
(AQ x AP) - (AQ x SP)
What is the Materials Price Variance?
PRODUCT REQUIRES 2.5 LBS. OF MATERIAL PER UNIT AT A PRICE OF $4/LB. LAST MONTH, 3,200 LBS. WERE USED TO MAKE 1,200 UNITS. WHAT IS THE MATERIALS QUANTITY VARIANCE?
$800 unfavorable
SJU COMPANY’S AP X AQ = 10,000 AND ITS SP X AQ IS $13,000. WOULD SJU COMPANY’S PRICE VARIANCE BE FAVORABLE OR UNFAVORABLE?
FAVORABLE BY 3,000
The two types of spending variances
What are quantity and price?
HAVING A FAVORABLE VARIANCE IS ALWAYS A GOOD THING. TRUE OR FALSE
What is false?
(AQ x SP) - (SQ x SP)
What is the Materials Quantity Variance?
A total of 6,850 kilograms of a raw material was purchased at a total cost of $21,920. The materials price variance was $1,370 favorable. The standard price per kilogram for the raw material must be:
$3.40
SR X AH IS $16,000 AND SR X SH IS $20,000. IS THE COMPANY’S EFFICIENCY VARIANCE FAVORABLE OR UNFAVORABLE ?
FAVORABLE BY 4,000
If your workers are poorly trained or are unmotivated, you may have an unfavorable ___________________
What is Labor Efficiency Variance?
RESPONSIBLE FOR RAW MATERIAL PURCHASE PRICES
Who is the purchasing manager?
(AH x AR) - (AH x SR)
What is the Labor Rate Variance?
A PRODUCT REQUIRES 2.5 LBS. OF MATERIAL PER UNIT AT A PRICE OF $4/LB. LAST MONTH, 3,200 LBS. WERE PURCHASED FOR $11,840. WHAT IS THE MATERIALS PRICE VARIANCE?
$960 favorable
The following standards for variable manufacturing overhead have been established for a company that makes only one product:
Standard hours per unit of output: 7.4 hours
Standard variable overhead rate: $13.80 per hour
The following data pertain to operations for the last month:
Actual hours: 2,775 hours
Actual total variable manufacturing overhead cost: $38,995
Actual output: 200 units
What is the variable overhead efficiency variance for the month?
$17,871 Unfavorable
Difference between actual price and standard price
What is a price variance?
RESPONSIBLE FOR THE QUANTITY OF RAW MATERIALS USED
Who is the production manager?
(AH x SR) - (SH x SR)
What is Labor Efficiency Variance?
ONE UNIT REQUIRES 1.3 STANDARD HOURS OF LABOR AT AN HOURLY RATE OF $16. LAST WEEK, 1,320 HOURS WERE WORKED TO PRODUCE 1,100 UNITS. WHAT IS THE LABOR EFFICIENCY VARIANCE?
$1,760 favorable
Viger Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month:
Budgeted level of activity: 9,500 MHs
Actual level of activity: 9,700 MHs
Standard variable manufacturing overhead rate: $8.20 per MH
Actual total variable manufacturing overhead:$76,800
What was the variable overhead rate variance for the month?
$2,740 Favorable
Difference between actual quantity and standard quantity
What is quantity variance?
If variable manufacturing overhead is applied on the basis of direct labor-hours and the variable overhead rate variance is favorable, then:
a. The standard direct labor hours allowed for actual output exceeded the actual hours
b. The actual direct labor hours exceeded the standard hours allowed for actual output
c. The actual variable overhead rate exceeded the standard rate
d. The standard variable overhead rate exceeded the actual rate
The standard variable overhead rate exceeded the actual rate
Actual is greater than (>) the Standard
What is Unfavorable?
PRODUCING 3,000 UNITS REQUIRED .8 HOURS PER UNIT AT A STANDARD RATE OF $11. THE LABOR COST WAS $27,120. WHAT IS THE LABOR RATE VARIANCE?
$720 unfavorable
The following labor standards have been established for a particular product:
Standard labor-hours per unit of output: 8.9 hours
Standard labor rate: $12.70 per hour
The following data pertain to operations concerning the product for the last month:
Actual hours worked: 6,700 hours
Actual total labor cost: $82,410
Actual output: 1,000 units
What is the labor efficiency variance for the month?
$27,940 Favorable
Standard quantity per unit of output= 4.6
Standard price= 15.05
Actual materials purchased = 3100
Actual cost of material purchased= 44020
Actual materials used in production 2400
Actual output = 300
What is the materials quantity variance
15351 unfavorable
SJU COMPANY HAS AQ X AP OF $24,000 AND SQ X SP OF $22,000. IS THE COMPANY’S SPENDING VARIANCE FAVORABLE OR UNFAVORABLE?
UNFAVORABLE BY 2,000