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Problem on straightforward variance analysis

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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 hours

@ $7.00

56

Fixed factory overhead: 8 hours

@ 2.5

20

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.

Instructions:

a. Compute Arrow's direct material variances.

b. Compute Arrow's direct labor variances.

c. Compute Arrow's variances for factory overhead.

Reference no: EM13334586

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