E 24.2
The standard costs and variances for direct materials, direct labor, and factory overhead for the
month of May are as follows:
Variances
Standard Cost Unfavorable Favorable
Direct materials . . . . . . . . . . . . . . . . . . . . . . . . $ 85,000
Price variance . . . . . . . . . . . . . . . . . . . . . . . $5,000
Quantity variance . . . . . . . . . . . . . . . . . . . . . $3,000
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000
Rate variance . . . . . . . . . . . . . . . . . . . . . . . . 2,700
Efficiency variance . . . . . . . . . . . . . . . . . . . . 6,200
Manufacturing overhead . . . . . . . . . . . . . . . . . 300,000
Spending variance . . . . . . . . . . . . . . . . . . . . 4,000
Volume variance . . . . . . . . . . . . . . . . . . . . . . 5,000
Determine the actual costs incurred during the month of May for direct materials, direct labor,
and manufacturing overhead.
E 24.4
Gumchara Corporation reported the following information with respect to the materials required to
manufacture amalgam florostats during the current month:
Standard price per gram of materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4
Standard quantity of materials per amalgam florostat . . . . . . . . . . . . . . . . . . . . . 5 grams
Actual materials purchased and used in production . . . . . . . . . . . . . . . . . . . . . . . 6,000 grams
Actual amalgam florostats produced during the month . . . . . . . . . . . . . . . . . . . . 1,000 units
Actual cost of materials purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $18,000
Normal monthly output . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900 units
a. Determine Gumchara’s materials price variance.
b. Determine Gumchara’s materials quantity variance.
c. Will Gumchara’s overhead volume variance be favorable or unfavorable? Why?
E 24.6
Marlo Enterprises produces radon mitigation pumps. Information pertaining to the company’s
monthly direct labor usage is provided below:
Standard labor rate per hour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $16
Standard hours allowed per radon mitigation pump . . . . . . . . . . . . . . . . . . . . . . . 0.5 hours
Actual pumps produced during the current month . . . . . . . . . . . . . . . . . . . . . . . . 9,000 units
Actual labor hours worked during the current month . . . . . . . . . . . . . . . . . . . . . . 3,600 hours
Actual labor cost for the current month . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $64,800
a. Compute the company’s labor rate variance.
b. Compute the company’s labor efficiency variance.
c. An extremely large order of radon mitigation pumps was filled during the month for exportation
to Saudi Arabia. Filling this order resulted in extended hours for many of the company’s workers.
Which labor variance reflects the extra hours worked by Marlo’s employees? Was their time
well utilized? Explain.
