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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 $
Standard price $
Difference $
Actual quantity (in cases)
Direct material price variance $
Indicate if favorable or unfavorable

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.)
Standard quantity (ozs.)
Difference
Standard price $
Direct material quantity variance $
Indicate if favorable or unfavorable

Interpret your results:

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 $
Standard rate $
Difference $
Actual time (in hours)
Direct labor rate variance $
Indicate if favorable or unfavorable

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

Interpret your results:

15. Determine and interpret the factory overhead controllable variance.

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

Interpret your results.


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)
Actual volume (cases)
Difference
Fixed factory overhead rate $
Factory overhead volume variance $
Indicate if favorable or unfavorable

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.

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