sagnik2422
Jan 9, 2015, 04:59 PM
The Albright Company manufactures rubber parts for the automobile industry. The company had planned to produce 4,750 units according to the November budget. Its material standard specifies a cost of $2.70 per gallon and usage of 1.5 gallons per unit. Variable manufacturing overhead is $2 per direct labor hour. Total standard direct labor hours allowed in November budget is 2,375 hours for the month. Total direct labor costs are budgeted to be $19,000. During November, the company made 4,000 units and incurred the following costs:
Direct Materials Purchased : 8,100 gallons at $3.10 per gallon
Direct Materials used : 7,600 gallons
Direct Labor Used : 2,400 at $8.25 per hour
Actual Variable Overhead : $4,175
Question 1) Albright's material (or usage) variance for November was ?
A) $3,240 Favorable B) $4,320 Favorable C) $3,240 Unfavorable D) $4,320 Unfavorable
E) None of Above
Answer was D) but I don't get how, please show help with steps.
Question 2) Albright's labor efficiency variance for November was ?
A) $3,200 unfavorable B) $600 unfavorable C) $3,200 favorable D) $600 favorable E) $50 Favorable
Answer was A) but I don't get how, please show help with steps
My work : Variance is the difference between Expected expenses and Actual expenses.
Part 1
1. Expected expenses = (#units x gallons/unit x $/gal) + variable mfg. overhead + direct labor costs
2. E = (4,750 x 1.5g/u x $2.70/g) + (2,375hr x $2/hr) + $19,000 = $42,988
3. Actual expenses = (#units x gallons/unit x $/gal) + variable mfg. overhead + direct labor costs
4. Usage/unit = 7,600g/4,000 = 1.9g/u
5. A = (4,000u x 1.9g/u x $3.10/g) + (2,400hr x $8.25/hr) + $4,175 = $47,535
6. Variance = E - A = $42,988 - 47,535 = $-4,548 So, the answer is option E.
( I was able to modify the numbers so that option D was correct, but in order to obtain that figure, it was necessary to use $3.07/g in the Actual expenses. I saw no reason to do so.)
Part 2
Variance is the difference between Expected expenses and Actual expenses.
It appeared to me that the answer would come from
V = [(2,375u x $2/u) + 19,000] - [(2,400hr x $8.25/hr) + $4,175] however, that approach did not yield a number which matched any of the choices given in the problem. I was unable to find another solution.
Direct Materials Purchased : 8,100 gallons at $3.10 per gallon
Direct Materials used : 7,600 gallons
Direct Labor Used : 2,400 at $8.25 per hour
Actual Variable Overhead : $4,175
Question 1) Albright's material (or usage) variance for November was ?
A) $3,240 Favorable B) $4,320 Favorable C) $3,240 Unfavorable D) $4,320 Unfavorable
E) None of Above
Answer was D) but I don't get how, please show help with steps.
Question 2) Albright's labor efficiency variance for November was ?
A) $3,200 unfavorable B) $600 unfavorable C) $3,200 favorable D) $600 favorable E) $50 Favorable
Answer was A) but I don't get how, please show help with steps
My work : Variance is the difference between Expected expenses and Actual expenses.
Part 1
1. Expected expenses = (#units x gallons/unit x $/gal) + variable mfg. overhead + direct labor costs
2. E = (4,750 x 1.5g/u x $2.70/g) + (2,375hr x $2/hr) + $19,000 = $42,988
3. Actual expenses = (#units x gallons/unit x $/gal) + variable mfg. overhead + direct labor costs
4. Usage/unit = 7,600g/4,000 = 1.9g/u
5. A = (4,000u x 1.9g/u x $3.10/g) + (2,400hr x $8.25/hr) + $4,175 = $47,535
6. Variance = E - A = $42,988 - 47,535 = $-4,548 So, the answer is option E.
( I was able to modify the numbers so that option D was correct, but in order to obtain that figure, it was necessary to use $3.07/g in the Actual expenses. I saw no reason to do so.)
Part 2
Variance is the difference between Expected expenses and Actual expenses.
It appeared to me that the answer would come from
V = [(2,375u x $2/u) + 19,000] - [(2,400hr x $8.25/hr) + $4,175] however, that approach did not yield a number which matched any of the choices given in the problem. I was unable to find another solution.