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Liquid weed killer: Standard costing variances DM DL VOH

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The standards for one case of liquid weed killer are:

Direct materials 6lbs@$7.5/lb.
Direct labor 3.6 hrs.@$16/hr
Variable overhead
(based on machine hours) 1.2hrs.@$5.5/hr

During the week ended August 6, the following activity took place:

4, 765 machine hours were worked.
25,331 lbs. of raw material were apurchased for inventory at a total cost of $193,782
4,180 cases of finished product were produced.
24,951 lbs. of raw material were used.
14,717 labor hours were worked at an average rate of $16.25 per hour.
$25,302 actual variable overhead costs were incurred.

Calculate each of the following variances and provide plausible explanations for
the results: (Do not round intermediate calculations and round your answers to a whole
number. Indicate the effect of each variance by selecting "F" for favorable, "U" FOR unfavorable.)

a. Price variance for raw materials purchased
b. Raw materials usage variance.
c. Direct labor efficiency variance.
d. Direct labor efficiency variance.
e. Variable overhead spending variance.
f. Variable overhead efficiency variance.

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Carol Sargent, PhD
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  • MSc, University of Virginia
  • PhD, Georgia State University
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