Hite Company has developed the following standard costs for its product for 2009:
The company expected to produce 25,000 units of Product A in 2009 and work 75,000 direct labor hours.
Actual results for 2009 are as follows:
- 26,000 units of Product A were produced.
- Actual direct labor costs were $630,800 for 76,000 direct labor hours worked.
- Actual direct materials purchased and used during the year cost $283,500 for 105,000 pounds.
- Actual variable overhead incurred was $130,000 and actual fixed overhead incurred was $170,000.
Instructions:
Compute the following variances showing all computations to support your answers. Clearly indicate whether the variances are favorable or unfavorable. Show your work.
| HITE COMPANY Standard Cost Card |
Product A | Cost Element | Standard Quality | x Standard Price | = Standard | Direct materials | 4 pounds | $3 | $12 | Direct labor | 3 hours | 8 | 24 | Manufacturing overhead | 3 hours | 4 | 12 | $48 | ||||||||||
- Materials quantity variance.
- Total direct labor variance.
- Direct labor quantity variance.
- Direct materials price variance.
- Total overhead variance.