Question

1.Fletcher Company collected the following data regarding production of one of its products. Compute the total direct materials variance.Direct materials standard (6 lbs. @ $2/lb.) $12 per finished unitActual direct materials used 243,000 lbs.Actual finished units produced 40,000 unitsActual cost of direct materials used $483,570a. $6,000 favorable.b. $3,570 unfavorable.c. $2,430 favorable.d. $6,000 unfavorable.e. $3,570 favorable.3.Summerlin Company budgeted 4,000 pounds of material costing $5.00 per pound to produce 2,000 units. The company actually used 4,500 pounds that cost $5.10 per pound to produce 2,000 units. What is the direct materials price variance?a. $400 unfavorable.b. $450 unfavorable.c. $2,500 unfavorable.d. $2,550 unfavorable.e. $2,950 unfavorable.4.Grant Co. uses the following standard to produce a single unit of its product: Variable overhead (2 hrs. per unit @ $4/hr.) Actual data for the month show total variable overhead costs of $190,000, and 23,000 units produced. The total variable overhead variance is:a. $6,000F.b. $6,000U.c. $78,000U.d. $78,000F.e.$0.

Answer 1

Fletcher

.b. $3,570 unfavorable

Summerline

e. $2,950 unfavorable

Grant

b. $6,000U

Step-by-step explanation:

First Company Fletcher

DIRECT MATERIALS VARIANCES

`(standard\:cost-actual\:cost) * actual \: quantity= DM \: price \: variance`

std cost $ 2.00

actual cost $ 1.99 ($483,570 actual cost/ 243,000 actual lbs)

quantity 243,000

difference $ 0.01

price variance $2,430.00

The diference is positive, we saved cash from the purchase of direct materials, the variance is favorable.

`(standard\:quantity-actual\:quantity) * standard \: cost = DM \: quantity \: variance`

std quantity 240000.00

actual quantity 243000.00

std cost $2.00

difference -3000.00

efficiency variance $(6,000.00)

The diference is negative, we used more lbs than we expected, this variable is unfavorable

Total:

2,430 - 6,000 = -3,570

Second company Sumerlin

DIRECT MATERIALS VARIANCES

For this company, all the values are given we just need to plug into the formula

`(standard\:cost-actual\:cost) * actual \: quantity= DM \: price \: variance`

std cost $5.00

actual cost $5.10

quantity 4,500

difference $(0.10)

price variance $(450.00)

The actial price is higher so it is more expensive. The difference with the standard is negative. The vaiance is unfavorable

`(standard\:quantity-actual\:quantity) * standard \: cost = DM \: quantity \: variance`

std quantity 4000.00 (is a given "budget 4,000 for 2,000 units")

actual quantity 4500.00

std cost $5.00

difference -500.00

efficiency variance $(2,500.00)

Total

-450 - 2,500 = -2,950

Third Company Grant

23,000 units x 2 hs = 46,000 standar hours

46,000 x $4 per unit = 184,000 standard variable overhead

actual overhead (190,000)

variance (6,000) unfavorable, the actual cost are higher than it should be.