. Straightforward variance analysis
Arrow Enterprises uses a standard costing system. The standard cost sheet for product no. 549 follows.
Direct materials: 4 units @ $6.50 $26.00
Direct labor: 8 hours @ $8.50 68
Variable factory overhead: 8 [email protected] $7.00 56
Fixed factory overhead: 8 hours @ 2.520
Total standard cost per unit $170.00
The following information pertains to activity for December:
1.Direct materials acquired during the month amounted to 26,350 units at $6.40 per unit. All materials were consumed in operations.
2.Arrow incurred an average wage rate of $8.75 for 51,400 hours of activity.
3.Total overhead incurred amounted to $508,400. Budgeted fixed overhead totals $1.8 million and is spread evenly throughout the year.
4.Actual production amounted to 6,500 completed units.
a. compute Arrows direct material variances
b. Compute Arrows direct labor variances.
c. Compute Arrows variances for factory overhead