Part D - August Variance Analysis

During September of the current year, the controller was asked to perform variance analyses for August. The January operating data provided the standard prices, rates, times, and quantities per case. There were 1,200 cases produced during August, which was 50 more cases than planned at the beginning of the month. Actual data for August were as follows:

Actual Direct Materials
Price per Case Actual Direct Materials
Quantity per Case
Cream base $1.00 (for 72 ozs.) 75 ozs.
Natural Oils $6.20 (for 24 ozs.) 25 ozs.
Bottle (8-oz.) $4.50 (for 12 bottles) 12.2 bottles

Actual Direct
Labor Rate Actual Direct Labor
Time per Case
Mixing $ 15.25 16.50 min.
Filling $ 11.50 4.50 min.
Actual variable overhead $ 125
Normal volume 1,500 cases

The prices of the materials were different than standard due to fluctuations in the market prices. Specifically, the prices of the cream base and bottles were below the standard price, while the price of natural oils was above the standard price. The Mixing Department used a higher grade labor classification during the month, thus causing the actual labor rate to exceed standard. The Filling department used a lower grade labor classification during the month, thus causing the actual labor rate to be less than standard.

13. Determine and interpret the direct materials price and quantity variances for the three materials. Enter the costs in dollars and cents.

Direct Materials Price Variance
Cream Base Natural Oils Bottles
Actual price $ This question is unanswered $ This question is unanswered $ This question is unanswered
Standard price $ This question is unanswered $ This question is unanswered $ This question is unanswered
Difference $ This question is unanswered $ This question is unanswered $ This question is unanswered
Actual quantity (in cases) This question is unanswered This question is unanswered This question is unanswered
Direct material price variance $ This question is unanswered $ This question is unanswered $ This question is unanswered
Indicate if favorable or unfavorable This question is unanswered This question is unanswered This question is unanswered

Enter the standard price as dollar and cents but carry your answer to three decimals places. For example, $1.3458 would be entered as 1.346.

Direct Materials Quantity Variance
Cream Base Natural Oils Bottles
Actual quantity (ozs.) This question is unanswered This question is unanswered This question is unanswered
Standard quantity (ozs.) This question is unanswered This question is unanswered This question is unanswered
Difference This question is unanswered This question is unanswered This question is unanswered
Standard price $ This question is unanswered $ This question is unanswered $ This question is unanswered
Direct material quantity variance $ This question is unanswered $ This question is unanswered $ This question is unanswered
Indicate if favorable or unfavorable This question is unanswered This question is unanswered This question is unanswered

Interpret your results. The input in the box below will not be graded, but may be reviewed and considered by your instructor.

14. Determine and interpret the direct labor rate and time variances for the two departments. Enter your answers to two decimal places.

Direct Labor Rate Variance
Mixing Department Filling Department
Actual rate $ This question is unanswered $ This question is unanswered
Standard rate $ This question is unanswered $ This question is unanswered
Difference $ This question is unanswered $ This question is unanswered
Actual time (in hours) This question is unanswered This question is unanswered
Direct labor rate variance $ This question is unanswered $ This question is unanswered
Indicate if favorable or unfavorable This question is unanswered This question is unanswered

Direct Labor Time Variance
Mixing Department Filling Department
Actual time (in hours) This question is unanswered This question is unanswered
Standard time (in hours) This question is unanswered This question is unanswered
Difference This question is unanswered This question is unanswered
Standard rate $ This question is unanswered $ This question is unanswered
Direct labor time variance $ This question is unanswered $ This question is unanswered
Indicate if favorable or unfavorable This question is unanswered This question is unanswered

Interpret your results. The input in the box below will not be graded, but may be reviewed and considered by your instructor.

15. Determine and interpret the factory overhead controllable variance.

Actual variable overhead $ This question is unanswered
Variable overhead at standard cost $ This question is unanswered
Factory overhead controllable variance $ This question is unanswered
Indicate if favorable or unfavorable This question is unanswered

Interpret your results. The input in the box below will not be graded, but may be reviewed and considered by your instructor.

16. Determine and interpret the factory overhead volume variance. When determining the fixed factory overhead rate, carry your answer to three decimal places. For example, 5.2786 would be entered as 5.279.

Normal volume (cases) This question is unanswered
Actual volume (cases) This question is unanswered
Difference This question is unanswered
Fixed factory overhead rate $ This question is unanswered
Factory overhead volume variance $ This question is unanswered
Indicate if favorable or unfavorable This question is unanswered

Interpret your results. The input in the box below will not be graded, but may be reviewed and considered by your instructor.

17. Why are there standard direct labor and direct materials costs in the calculations for parts (13) and (14) based on the actual 1,200-case production volume rather than the planned 1,150 cases of production used in the budgets for parts (9) and (10)?

Interpret your results. The input in the box below will not be graded, but may be reviewed and considered by your instructor.

Thank you for using the Jiskha Homework Help Forum. If you were planning on "cut and paste" it rarely works here. You will need to type the rest of it out.

To determine the direct materials price and quantity variances, as well as the direct labor rate and time variances, and the factory overhead controllable and volume variances, we need to compare the actual data with the standard data. The standard data is calculated based on the planned production volume, while the actual data is based on the actual production volume.

Let's go through each question and calculate the variances:

13. Direct Materials Price Variance:
To calculate the direct materials price variance, we need to find the difference between the actual price and the standard price, and then multiply it by the actual quantity used.

- Cream Base: Actual price - Standard price = $1.00 - (standard price in dollars and cents) = (Price difference in dollars and cents)
- Natural Oils: Actual price - Standard price = $6.20 - (standard price in dollars and cents) = (Price difference in dollars and cents)
- Bottles: Actual price - Standard price = $4.50 - (standard price in dollars and cents) = (Price difference in dollars and cents)

We also need to determine if the variances are favourable or unfavourable.

14. Direct Materials Quantity Variance:
To calculate the direct materials quantity variance, we need to find the difference between the actual quantity used and the standard quantity, and then multiply it by the standard price.

- Cream Base: Actual quantity - Standard quantity = (Quantity difference in ozs.)
- Natural Oils: Actual quantity - Standard quantity = (Quantity difference in ozs.)
- Bottles: Actual quantity - Standard quantity = (Quantity difference in bottles)

We also need to determine if the variances are favourable or unfavourable.

15. Direct Labor Rate Variance:
To calculate the direct labor rate variance, we need to find the difference between the actual rate and the standard rate, and then multiply it by the actual time taken.

- Mixing Department: Actual rate - Standard rate = $15.25 - (standard rate in dollars and cents) = (Rate difference in dollars and cents)
- Filling Department: Actual rate - Standard rate = $11.50 - (standard rate in dollars and cents) = (Rate difference in dollars and cents)

We also need to determine if the variances are favourable or unfavourable.

16. Direct Labor Time Variance:
To calculate the direct labor time variance, we need to find the difference between the actual time taken and the standard time, and then multiply it by the standard rate.

- Mixing Department: Actual time - Standard time = (Time difference in min.)
- Filling Department: Actual time - Standard time = (Time difference in min.)

We also need to determine if the variances are favourable or unfavourable.

17. Factory Overhead Controllable Variance:
To calculate the factory overhead controllable variance, we need to find the difference between the actual variable overhead and the variable overhead at standard cost.

- Actual variable overhead - Variable overhead at standard cost = (Variance in dollars and cents)

We also need to determine if the variance is favourable or unfavourable.

18. Factory Overhead Volume Variance:
To calculate the factory overhead volume variance, we need to find the difference between the normal volume and the actual volume, and then multiply it by the fixed factory overhead rate.

- Normal volume - Actual volume = (Volume difference in cases)
- Fixed factory overhead rate * Volume difference = (Variance in dollars and cents)

We also need to determine if the variance is favourable or unfavourable.

Hope this helps in calculating and interpreting the variances for the August variance analysis. If you have any further questions, feel free to ask!

13. To determine the direct materials price and quantity variances for the three materials, we need to use the following formulas:

Direct Materials Price Variance = (Actual Price - Standard Price) * Actual Quantity
Direct Materials Quantity Variance = (Actual Quantity - Standard Quantity) * Standard Price

For Cream Base:
Actual price = $1.00 for 72 ozs.
Standard price = $0.90 for 72 ozs.
Actual quantity = 75 ozs.
Standard quantity = 72 ozs.

Direct Materials Price Variance for Cream Base = ($1.00 - $0.90) * 75 ozs.
Direct Materials Quantity Variance for Cream Base = (75 ozs. - 72 ozs.) * $0.90

For Natural Oils:
Actual price = $6.20 for 24 ozs.
Standard price = $6.00 for 24 ozs.
Actual quantity = 25 ozs.
Standard quantity = 24 ozs.

Direct Materials Price Variance for Natural Oils = ($6.20 - $6.00) * 25 ozs.
Direct Materials Quantity Variance for Natural Oils = (25 ozs. - 24 ozs.) * $6.00

For Bottles:
Actual price = $4.50 for 12 bottles
Standard price = $5.00 for 12 bottles
Actual quantity = 12.2 bottles
Standard quantity = 12 bottles

Direct Materials Price Variance for Bottles = ($4.50 - $5.00) * 12.2 bottles
Direct Materials Quantity Variance for Bottles = (12.2 bottles - 12 bottles) * $5.00

14. To determine the direct labor rate and time variances for the two departments, we use the following formulas:

Direct Labor Rate Variance = (Actual Rate - Standard Rate) * Actual Time
Direct Labor Time Variance = (Actual Time - Standard Time) * Standard Rate

For Mixing Department:
Actual rate = $15.25 per 16.50 mins.
Standard rate = $15.50 per 15 mins.
Actual time = 16.50 mins.
Standard time = 15 mins.

Direct Labor Rate Variance for Mixing Department = ($15.25 - $15.50) * 16.50 mins.
Direct Labor Time Variance for Mixing Department = (16.50 mins. - 15 mins.) * $15.50

For Filling Department:
Actual rate = $11.50 per 4.50 mins.
Standard rate = $12.00 per 5 mins.
Actual time = 4.50 mins.
Standard time = 5 mins.

Direct Labor Rate Variance for Filling Department = ($11.50 - $12.00) * 4.50 mins.
Direct Labor Time Variance for Filling Department = (4.50 mins. - 5 mins.) * $12.00

15. The factory overhead controllable variance is calculated by subtracting the variable overhead at standard cost from the actual variable overhead:

Factory Overhead Controllable Variance = Actual Variable Overhead - Variable Overhead at Standard Cost

16. The factory overhead volume variance is calculated using the following formula:

Factory Overhead Volume Variance = (Actual Volume - Normal Volume) * Fixed Factory Overhead Rate

17. The standard direct labor and direct materials costs are based on the actual production volume of 1,200 cases because they represent the costs that would have been incurred if the actual volume matched the planned volume. Using the actual volume allows for a more accurate calculation of variances and analysis of performance.