Pure Corporation makes a product with the following standard costs:
$$\begin{array} { | l | c | c | c | }
\hline \text { Imputs } & \begin{array} { c }
\text { Standard } \
\text { Quantiy } \
\text { or Hours }
\end{array} & \begin{array} { c }
\text { Standard } \
\text { Price } \
\text { or Rate }
\end{array} & \begin{array} { c }
\text { Standard } \
\text { Cost } \
\text { Per Unit }
\end{array} \
\hline \begin{array} { l }
\text { Direct } \
\text { materials }
\end{array} & 4.3 \text { pounds } & \begin{array} { c }
\$ 6.00 \text { per } \
\text { pound }
\end{array} & \$ 25.80 \
\hline \text { Direct labor } & 0.7 \text { hours } & \begin{array} { c }
\$ 20.00 \text { per } \
\text { hour }
\end{array} & \$ 14.00 \
\hline \begin{array} { l }
\text { Variable } \
\text { overhead }
\end{array} & 0.7 \text { hours } & \begin{array} { c }
\$ 2.00 \text { per } \
\text { hour }
\end{array} & \$ 1.40 \
\hline
\end{array}$$ The company reported the following results concerning this product in September.
$$\begin{array} { | l | r | }
\hline \text { Originally budgeted output } & 1,900 \text { units } \
\hline \text { Actual output } & 1,700 \text { units } \
\hline \text { Raw materials used in production } & 7,210 \text { pounds } \
\hline \text { Purchases of raw materials } & 7,600 \text { pounds } \
\hline \text { Actual direct labor-hours } & 1,260 \text { hours } \
\hline \text { Actual cost of raw materials purchases } & \$ 43,320 \
\hline \text { Actual direct labor cost } & \$ 25,578 \
\hline \text { Actual variable overhead cost } & \$ 2,394 \
\hline
\end{array}$$
The company applies variable overhead on the basis of direct labor-hours.The direct materials purchases variance is computed when the materials are purchased.Required:
a.Compute the materials quantity variance.b.Compute the materials price variance.c.Compute the labor efficiency variance.d.Compute the direct labor rate variance.e.Compute the variable overhead efficiency variance.f.Compute the variable overhead rate variance.

Question

Pure Corporation makes a product with the following standard costs:
$$\begin{array} { | l | c | c | c | } 
\hline \text { Imputs } & \begin{array} { c } 
\text { Standard } \
\text { Quantiy } \
\text { or Hours }
\end{array} & \begin{array} { c } 
\text { Standard } \
\text { Price } \
\text { or Rate }
\end{array} & \begin{array} { c } 
\text { Standard } \
\text { Cost } \
\text { Per Unit }
\end{array} \
\hline \begin{array} { l } 
\text { Direct } \
\text { materials }
\end{array} & 4.3 \text { pounds } & \begin{array} { c } 
\$ 6.00 \text { per } \
\text { pound }
\end{array} & \$ 25.80 \
\hline \text { Direct labor } & 0.7 \text { hours } & \begin{array} { c } 
\$ 20.00 \text { per } \
\text { hour }
\end{array} & \$ 14.00 \
\hline \begin{array} { l } 
\text { Variable } \
\text { overhead }
\end{array} & 0.7 \text { hours } & \begin{array} { c } 
\$ 2.00 \text { per } \
\text { hour }
\end{array} & \$ 1.40 \
\hline
\end{array}$$ The company reported the following results concerning this product in September. 
$$\begin{array} { | l | r | } 
\hline \text { Originally budgeted output } & 1,900 \text { units } \
\hline \text { Actual output } & 1,700 \text { units } \
\hline \text { Raw materials used in production } & 7,210 \text { pounds } \
\hline \text { Purchases of raw materials } & 7,600 \text { pounds } \
\hline \text { Actual direct labor-hours } & 1,260 \text { hours } \
\hline \text { Actual cost of raw materials purchases } & \$ 43,320 \
\hline \text { Actual direct labor cost } & \$ 25,578 \
\hline \text { Actual variable overhead cost } & \$ 2,394 \
\hline
\end{array}$$ 
The company applies variable overhead on the basis of direct labor-hours.The direct materials purchases variance is computed when the materials are purchased.Required:
a.Compute the materials quantity variance.b.Compute the materials price variance.c.Compute the labor efficiency variance.d.Compute the direct labor rate variance.e.Compute the variable overhead efficiency variance.f.Compute the variable overhead rate variance.

Quizplus · Accepted Answer

The Answer of Pure Corporation makes a product with the following standard costs:
$$\begin{array} { | l | c | c | c | } 
\hline \text { Imputs } & \begin{array} { c } 
\text { Standard } \
\text { Quantiy } \
\text { or Hours }
\end{array} & \begin{array} { c } 
\text { Standard } \
\text { Price } \
\text { or Rate }
\end{array} & \begin{array} { c } 
\text { Standard } \
\text { Cost } \
\text { Per Unit }
\end{array} \
\hline \begin{array} { l } 
\text { Direct } \
\text { materials }
\end{array} & 4.3 \text { pounds } & \begin{array} { c } 
\$ 6.00 \text { per } \
\text { pound }
\end{array} & \$ 25.80 \
\hline \text { Direct labor } & 0.7 \text { hours } & \begin{array} { c } 
\$ 20.00 \text { per } \
\text { hour }
\end{array} & \$ 14.00 \
\hline \begin{array} { l } 
\text { Variable } \
\text { overhead }
\end{array} & 0.7 \text { hours } & \begin{array} { c } 
\$ 2.00 \text { per } \
\text { hour }
\end{array} & \$ 1.40 \
\hline
\end{array}$$ The company reported the following results concerning this product in September. 
$$\begin{array} { | l | r | } 
\hline \text { Originally budgeted output } & 1,900 \text { units } \
\hline \text { Actual output } & 1,700 \text { units } \
\hline \text { Raw materials used in production } & 7,210 \text { pounds } \
\hline \text { Purchases of raw materials } & 7,600 \text { pounds } \
\hline \text { Actual direct labor-hours } & 1,260 \text { hours } \
\hline \text { Actual cost of raw materials purchases } & \$ 43,320 \
\hline \text { Actual direct labor cost } & \$ 25,578 \
\hline \text { Actual variable overhead cost } & \$ 2,394 \
\hline
\end{array}$$ 
The company applies variable overhead on the basis of direct labor-hours.The direct materials purchases variance is computed when the materials are purchased.Required:
a.Compute the materials quantity variance.b.Compute the materials price variance.c.Compute the labor efficiency variance.d.Compute the direct labor rate variance.e.Compute the variable overhead efficiency variance.f.Compute the variable overhead rate variance.

Pure Corporation Makes a Product with the Following Standard Costs