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Flagstaff, Inc. uses standard costing for its one product, baseball bats. The standards call for 3 board-feet of wood at $1.40 per board-foot, and 45 minutes of work at $12 per hour per bat. Total manufacturing overhead costs were estimated at $9,450, of which the variable portion was $0.50 per bat and the fixed portion was $1.00 per bat with an estimate of 6,300 bats to be produced. Flagstaff identifies price variances at the earliest possible point in time.During March, the company had the following results:Direct labor used = 4,800 hours at a cost of $56,400Actual manufacturing overhead fixed costs = $6,000Actual manufacturing overhead variable costs = $3,100Bats produced = 6,000InstructionsCompute the following variances for March.1. Labor quantity variance2. Total labor variancea3. Overhead controllable variancea4. Overhead volume variance2. Riggins, Inc. manufactures one product called tybos. The company uses a standard cost system and sells each tybo for $8. At the start of monthly production, Riggins estimated 9,500 tybos would be produced in March. Riggins has established the following material and labor standards to produce one tybo:Standard Quantity Standard PriceDirect materials 2.5 pounds $3 per poundDirect labor 0.6 hours $10 per hourDuring March 2013, the following activity was recorded by the company relating to the production of tybos:
1. The company produced 9,000 units during the month.
2. A total of 24,000 pounds of materials were purchased at a cost of $66,000.
3. A total of 24,000 pounds of materials were used in production.
4. 5,000 hours of labor were incurred during the month at a total wage cost of $55,000.Instructions
Calculate the following variances for March for Riggins, Inc.
(a) Materials price variance
(b) Materials quantity variance
(c) Labor price variance
(d) Labor quantity variance

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Answer:

1a. Labour quantity variance =$3,600 Unfavorable

1b.Total labor variance= $2,400 Unfavorable

1c.Overhead controllable variance= $200 Favorable

1d.Overhead volume variance= $299 Unfavorable

2a.Material price variance $6,000 favorable

2b.Materials quality variance =$4,500 unfavorable

2c.Labor price variance $5,000 unfavorable

2d.Labor quantity variance= $4,000 favorable

Step by Step Explanation:

1.Flagstaff, Inc

a. Calculation for Labor quantity variance

Using this formula

Labor quantity variance = (Actual hours × Standard rate) – (Standard hours × Standard rate)

Let plug in the formula

Labor quantity variance= (4,800 × $12) – [(3/4 × 6,000) × $12]

Labour quantity variance= ($57,600-$54,000)

Labour quantity variance =$3,600 Unfavorable

b.Calculation for Total labor variance

Using this formula

Total Labor variance= (Actual hours × Actual rate) – (Standard hours × Standard rate)

Let plug in the formula

Total labor variance= (4,800 × $11.75) – [(3/4 × 6,000) × $12]

Total labor variance=$56,400-$54,000

Total labor variance= $2,400 Unfavorable

c. Calculation for Overhead controllable variance

Using this formula

Overhead controllable variance= Actual overhead – Overhead budgeted

Let plug in the formula

Overhead controllable variance= ($3,100 + $6,000) – [($0.50 × 6,000) + $6,300]

Overhead controllable variance=$9,100-($3,000+$6,300)

Overhead controllable variance =$9,100-$9,300

Overhead controllable variance= $200 Favorable

d. Calculation for Overhead volume variance

Using this formula

Overhead volume variance= (Normal hours – Standard hours) × Fixed overhead rate

Let plug in the formula

Overhead volume variance= [(6,300 × 3/4) – 4,500] × $1.33

Overhead volume variance =($4,725-$4,500)×$1.33

Overhead volume variance =$225×1.33

Overhead volume variance= $299 Unfavorable

2.Riggins, Inc.

a. Calculation for Materials price variance

Using this formula

Materials price variance= (Actual quantity purchased × Actual price) – (Actual quantity purchased × Standard price)

Let plug in the formula

Material price variance= (24,000 × $2.75) – (24,000 × $3)

Material price variance= $66,000-$72,000

Material price variance $6,000 favorable

b.Calaculation for Materials quantity variance

Using this formula

Materials quality variance= (Actual quantity used × Standard price) – (Standard quantity × Standard price)

Let plug in the formula

Materials quality variance= (24,000 × $3) – [(9,000 × 2.5) × $3]

Materials quality variance=$72,000-$67,500

Materials quality variance =$4,500 unfavorable

c.Calculation for Labor price variance

Using this formula

Labor price variance= (Actual hours x Actual rate) – (Actual hours × Standard rate)

Let plug in the formula

Labor price variance= (5,000 × $11) – (5,000 × $10)

Labor price variance=$55,000-$50,000

Labor price variance $5,000 unfavorable

d. Calculation for Labor quantity variance

Using this formula

Labor quantity variance= (Actual hours × Standard rate) – (Standard hours × Standard rate)

Let plug in the formula

Labor quantity variance= (5,000 × $10) – [(0.6 × 9,000) × $10]

Labor quantity variance=$50,000-$54,000

Labor quantity variance= $4,000 favorable

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