Variance Analysis for Decision Making

Instructions: 

Part C: Variance Analysis for Decision Making 

Bronfenbrenner Co. uses a standard cost system for its single product in which variable overhead is applied on the basis of direct labor hours. The following information is given: 

Standard costs per unit: 

Raw materials (1.5 grams at $16 per gram) ………………………. $24.00

Direct labor (0.75 hours at $8 per hour)……………………………. $6.00 

Variable overhead (0.75 hours at $3 per hour)…………………… $2.25 

Actual experience for current year: 

Units produced ……………………………………………………………… 22,400 units

Purchases of raw materials (21,000 grams at $17 per gram) .. $357,000 

Raw materials used………………………………………………………… 33,400 grams 

Direct labor (16,750 hours at $8 per hour)………………………… $134,000 Variable overhead cost incurred………………………………………. $48,575 

Required: 

Compute the following variances for raw materials, direct labor, and variable overhead, assuming that the price variance for materials is recognized at point of purchase: 

a. Direct materials price variance. 

b. Direct materials quantity variance. 

c. Direct labor rate variance. 

d. Direct labor efficiency variance. 

e. Variable overhead spending variance.

f. Variable overhead efficiency variance.

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