Ralston Corporation makes a product with the following standard costs:
$$\begin{array} { | l | c | c | c | }
\hline \text { Imputs } & \begin{array} { c }
\text { Standard } \
\text { Quantity } \
\text { or Hours }
\end{array} & \begin{array} { c }
\text { Standard } \
\text { Price } \
\text { or Rate }
\end{array} & \begin{array} { c }
\text { Standard } \
\text { Cost } \
\text { Per Unit }
\end{array} \
\hline \begin{array} { l }
\text { Direct } \
\text { materials }
\end{array} & 6.9 \text { liters } & \begin{array} { c }
\$ 5.00 \text { per } \
\text { liter }
\end{array} & \$ 34.50 \
\hline \text { Direct labor } & 0.3 \text { hours } & \begin{array} { c }
\$ 17.00 \text { per } \
\text { hour }
\end{array} & \$ 5.10 \
\hline \begin{array} { l }
\text { Variable } \
\text { overhead }
\end{array} & 0.3 \text { hours } & \begin{array} { c }
\$ 6.00 \text { per } \
\text { hour }
\end{array} & \$ 1.80 \
\hline
\end{array}$$ The company reported the following results concerning this product in August.$\begin{array}{|lr|}
\hline \text { Originally budgeted output } & 8,600 \text { units } \
\hline \text { Actual output } & 8,400 \text { units } \
\hline \text { Raw materials used in production } & 58,330 \text { liters } \
\hline \text { Actual direct labor-hours } & 2,310 \text { hours } \
\hline \text { Purchases of raw materials } & 62,500 \text { liters } \
\hline \text { Actual price of raw materials } & \$ 4.90 \text { per liter } \
\hline \text { Actual direct labor rate } & \$ 17.10 \text { per hour } \
\hline \text { Actual variable overhead rate } & \$ 5.50 \text { per hour } \
\hline
\end{array}$
The materials price variance is recognized when materials are purchased.Variable overhead is applied on the basis of direct labor-hours.Required:
a.Compute the materials quantity variance.
b.Compute the materials price variance.
c.Compute the labor efficiency variance.
d.Compute the direct labor rate variance.e.Compute the variable overhead efficiency variance.f.Compute the variable overhead rate variance.

Question

Ralston Corporation makes a product with the following standard costs:
 $$\begin{array} { | l | c | c | c | } 
\hline \text { Imputs } & \begin{array} { c } 
\text { Standard } \
\text { Quantity } \
\text { or Hours }
\end{array} & \begin{array} { c } 
\text { Standard } \
\text { Price } \
\text { or Rate }
\end{array} & \begin{array} { c } 
\text { Standard } \
\text { Cost } \
\text { Per Unit }
\end{array} \
\hline \begin{array} { l } 
\text { Direct } \
\text { materials }
\end{array} & 6.9 \text { liters } & \begin{array} { c } 
\$ 5.00 \text { per } \
\text { liter }
\end{array} & \$ 34.50 \
\hline \text { Direct labor } & 0.3 \text { hours } & \begin{array} { c } 
\$ 17.00 \text { per } \
\text { hour }
\end{array} & \$ 5.10 \
\hline \begin{array} { l } 
\text { Variable } \
\text { overhead }
\end{array} & 0.3 \text { hours } & \begin{array} { c } 
\$ 6.00 \text { per } \
\text { hour }
\end{array} & \$ 1.80 \
\hline
\end{array}$$ The company reported the following results concerning this product in August.$\begin{array}{|lr|}
\hline \text { Originally budgeted output } & 8,600 \text { units } \
\hline \text { Actual output } & 8,400 \text { units } \
\hline \text { Raw materials used in production } & 58,330 \text { liters } \
\hline \text { Actual direct labor-hours } & 2,310 \text { hours } \
\hline \text { Purchases of raw materials } & 62,500 \text { liters } \
\hline \text { Actual price of raw materials } & \$ 4.90 \text { per liter } \
\hline \text { Actual direct labor rate } & \$ 17.10 \text { per hour } \
\hline \text { Actual variable overhead rate } & \$ 5.50 \text { per hour } \
\hline
\end{array}$
The materials price variance is recognized when materials are purchased.Variable overhead is applied on the basis of direct labor-hours.Required:
a.Compute the materials quantity variance.
b.Compute the materials price variance.
c.Compute the labor efficiency variance.
d.Compute the direct labor rate variance.e.Compute the variable overhead efficiency variance.f.Compute the variable overhead rate variance.

Quizplus · Accepted Answer

The Answer of Ralston Corporation makes a product with the following standard costs:
 $$\begin{array} { | l | c | c | c | } 
\hline \text { Imputs } & \begin{array} { c } 
\text { Standard } \
\text { Quantity } \
\text { or Hours }
\end{array} & \begin{array} { c } 
\text { Standard } \
\text { Price } \
\text { or Rate }
\end{array} & \begin{array} { c } 
\text { Standard } \
\text { Cost } \
\text { Per Unit }
\end{array} \
\hline \begin{array} { l } 
\text { Direct } \
\text { materials }
\end{array} & 6.9 \text { liters } & \begin{array} { c } 
\$ 5.00 \text { per } \
\text { liter }
\end{array} & \$ 34.50 \
\hline \text { Direct labor } & 0.3 \text { hours } & \begin{array} { c } 
\$ 17.00 \text { per } \
\text { hour }
\end{array} & \$ 5.10 \
\hline \begin{array} { l } 
\text { Variable } \
\text { overhead }
\end{array} & 0.3 \text { hours } & \begin{array} { c } 
\$ 6.00 \text { per } \
\text { hour }
\end{array} & \$ 1.80 \
\hline
\end{array}$$ The company reported the following results concerning this product in August.$\begin{array}{|lr|}
\hline \text { Originally budgeted output } & 8,600 \text { units } \
\hline \text { Actual output } & 8,400 \text { units } \
\hline \text { Raw materials used in production } & 58,330 \text { liters } \
\hline \text { Actual direct labor-hours } & 2,310 \text { hours } \
\hline \text { Purchases of raw materials } & 62,500 \text { liters } \
\hline \text { Actual price of raw materials } & \$ 4.90 \text { per liter } \
\hline \text { Actual direct labor rate } & \$ 17.10 \text { per hour } \
\hline \text { Actual variable overhead rate } & \$ 5.50 \text { per hour } \
\hline
\end{array}$
The materials price variance is recognized when materials are purchased.Variable overhead is applied on the basis of direct labor-hours.Required:
a.Compute the materials quantity variance.
b.Compute the materials price variance.
c.Compute the labor efficiency variance.
d.Compute the direct labor rate variance.e.Compute the variable overhead efficiency variance.f.Compute the variable overhead rate variance.

Ralston Corporation Makes a Product with the Following Standard Costs