29 Jun Question The impact of variance on unit cost
Question
The impact of variance on unit cost
Lander manufactures a number of products the standard relating to one of these product are showing along with actual cost data 4 may
standard cost per unit Actual cost per unit
Direct material
standard-1.80 feet at 3.00 per foot 5.40
actual 1.75 ft at 3.20 per foot 5.60
direct labor
standard 0.90 at 18.00per hr 16.20
Actual 0.95 hr at 17.40. per hr 16.53
variable overhead
standard 0.90 hr at 5.00 per hr 4.50
actual 0.95 hr at 4,60 per hr 4.37
total cost per unit 26.10 26.50
excess of actual cost over standard cost per unit 0.40
the production manager was please when he saw this report and he said 0.40 excess cost is well within 2 percent limit management has set for acceptable variance and not to worry about this product.
actual production 4 the month was 12,000 units. variable overhead cost is assign to products on the basis of direct labor hrs. there were no beginning or ending inventory of material.
I need to prepare and compute the following variance 4 may
material price and quantity variance
labor rate and efficiency variance
variable overhead rate and efficiency variance
how much of the 0.40 excess unit cost is traceable to each of the variance compute above how much of the 0.40 excess unit cost is traceable to apparent inefficient use of labor time
d u agree that the excess unit cost is not of concern and explain
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