Quiñones, Mary Angela Felicia T.

BSMA – BCE

Assignment 1

Instruction:

Answer the following. Show your appropriate supporting solutions for each question. Properly
label your answers. Use MS Word or MS Excel.

The Jazz Company has made the following information available for its production facility for the
month of June. Fixed overhead was estimated at 19,000 machine hours for the production cycle. Actual
machine hours for the period were 18,900, which generated 3,900 units.

Material purchased (80,000 pieces) $314,000

Material quantity variance $6,400 U
Machine hours used (18,900 hours)
VOH spending variance $50 U
Actual fixed overhead $60,000
Actual labor cost $40,120
Actual labor hours 5,900
Jazz’s standard costs are as follows:

Direct material 20 pieces @ $4 per piece

Direct labor 1.5 hours @$6 per hour
Variable overhead
(applied on a machine hour basis) 4.8 hours @2.50 per hour
Fixed overhead
(applied on a machine hour basis) 4.8 hours @3 per hour

Required:

Determine the following:

a. Material Purchase Price Variance

Actual Material Cost $314,00

Actual Pieces @ Standard Cost (80,000 x 4) 320,000
Material Purchase Price Variance $6,000 F

b. Standard Quantity Allowed for Material

Units Generated 3,900

Number of Units 20
Standard Quantity Allowed for Material 78,000

c. Total Standard Cost of Material Allowed

Standard Quantity Allowed for Material 78,000

Standard Cost per Piece $4
Total Standard Cost of Material Allowed $312,000

d. Actual Quantity of Material Used

Total Standard Cost of Material Allowed $312,000

Material Quantity Variance $6,400 U
Actual Quantity of Material Used $318,400

e. Labor Rate Variance

 Actual Labor Cost $40,120
Direct Labor Overhead (5,900 x $6) 35,400
Labor Rate Variance $4,720 U

f. Standard Hours Allowed for Labor

Units Generated 3,900

Standard Hours per Unit 1.5
Standard Hours Allowed for Labor 5,850

g. Total Standard Cost of Labor Allowed

Standard Hours Allowed for Labor 5,850

Standard Cost per Hour $6
Total Standard Cost of Labor Allowed $35,100

h. Labor Efficiency Variance

Actual Hours @ Standard $35,400

Standard Cost of Labor Allowed 35,100
Labor Efficiency Variance $300 U

i. Actual Variable Overhead Incurred

Actual Machine Hours @Standard (18,900 x $2.50) $47,250

Variable Overhead Spending Variance 50 U
Actual Variable Overhead Incurred 47,300

j. Standard Machine Hours Allowed

Unites Generated 3,900

Standard Hours per Unit 4.8
Standard Machine Hours Allowed 18,720

k. Variable Overhead Efficiency Variance

Standard Hours Allowed @ Standard (18,720 x $2.50) $46,800

Actual Machine Hours @ Standard (18,900 x $2.50) 47,250
Variable Overhead Efficiency Variance $450 U

l. Budgeted Fixed Overhead

Machine Hours 19,000

Standard Cost per Hour $3
Budgeted Fixed Overhead $57,000

m. Applied Fixed Overhead

Units Generated 3,900

Standard Hours per Unit 4.8
Standard Cost per Unit $3
Applied Fixed Overhead $56,160

n. Fixed Overhead Spending Variance

Actual Fixed Overhead $60,000

Budgeted Fixed Overhead 57,000
Fixed Overhead Spending Variance $3,000 U

o. Volume Variance

Budgeted Fixed Overhead $57,000

Applied Fixed Overhead 56,160
 Volume Variance $840 U

p. Total Overhead Variance

Total Actual Overhead ($60,000 + $47,300) $107,300

Total Applied Overhead (18,720 x $5.50) 102,960
Total Overhead Variance $4,340 U