Question 31

Kopecky Inc., which produces a single product, has prepared the following standard cost sheet for one unit of
the product.
Direct materials (8 kilograms at $2.50 per
kilogram)
Direct labour (3 hours at $12.00 per hour)

$20.00
$36.00

During the month of April, the company manufactures 230 units and incurs the following actual costs.
Direct materials (1,900
kilograms)
Direct labour (700 hours)

$4,940
$8,120

Calculate the total, price, and quantity variances for materials and labour.

Total materials variance:

Materials price variance:

Materials quantity variance:

Total labour variance:

Labour price variance:

Labour quantity variance:

340

190

150

160

280

120

uestion 32
The following information was taken from the annual manufacturing overhead cost budget of Fernetti
Company.
Variable manufacturing overhead costs
Fixed manufacturing overhead costs
Normal production level in labour hours
Normal production level in units
Standard labour hours per unit

$33,000
$19,800
16,500
4,125
4

During the year, 4,000 units were produced, 16,100 hours were worked, and the actual manufacturing overhead

was $54,000. Actual fixed manufacturing overhead costs equalled budgeted fixed manufacturing overhead
costs. Overhead is applied on the basis of direct labour hours.
(a) Calculate the total, fixed, and variable predetermined manufacturing overhead rates. (Round your
answers to 2 decimal places.)
(b) Calculate the total, controllable, and volume overhead variances. (Round your answers to 0 decimal
places.)
(a)
Item
Amount
Hours
Rate
33000
2
16500
Variable overhead
$
$
Fixed overhead
Total overhead

19800

16500

52800

16500

1.2

3.2

(b)
Total overhead variance:

Overhead controllable variance:

Overhead volume variance:

2800

2200

600

Question 33

Hi-Tek Labs performs steroid testing services to high schools, colleges, and universities. Because the
company deals solely with educational institutions, the price of each test is strictly regulated. Therefore,
the costs incurred must be carefully monitored and controlled. Shown below are the standard costs for a
typical test.
Direct materials (1 petrie dish at $2 per dish)
Direct labour (0.5 hours at $20 per hour)
Variable overhead (0.5 hours at $8 per hour)
Fixed overhead (0.5 hours at $3 per hour)
Total standard cost per test

$ 2.00
10.00
4.00
1.50
$17.50

The lab does not maintain an inventory of petrie dishes. Therefore, the dishes purchased each month are
used that month. Actual activity for the month of May 2009, when 2,000 tests were conducted, resulted in
the following.
Direct materials (2,020 dishes)

$ 4,242

Direct labour (995 hours)

Variable overhead
Fixed overhead

20,895
8,100
3,400

Monthly budgeted fixed overhead is $3,600. Revenues for the month were $45,000, and
selling and administrative expenses were $2,000.

Calculate the price and quantity variances for direct materials and direct labour, and for overhead the
controllable and volume variances.
Materials price variance:

Materials quantity variance:

Labour price variance:

Labour quantity variance:

202
40
995
100

Overhead controllable variance: $

500

Overhead volume variance:

Complete an income statement for management. (If a number is negative enter it in (parenthesis).)
HI-TEK LABS
Income Statement
For the Month Ended May 31, 2009
$

45000
35000
10000

Variances
Materials price
Materials quantity

-202
-40

Labour price
Labour quantity
Overhead controllable

-995

Overhead volume

Total variances-favourable

100
-500

-1637
8363
-2000

6363