Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 52

Manufacturing Variances

Clemson Company prepares its budgets on the basis of standard costs. A responsibility report is prepared monthly showing the differences between master budget and actual results. Variances are analyzed and reported separately. There are no materials inventories.

?The following information relates to the current period:

Standard costs (per unit of output)
Direct materials, 2 gallons @ $6.00 per gallon	$1 2
Direct labor, 4 hours @ $24 per hour	96
Factory overhead
Variable (25% of direct labor cost)	24
Total standard cost per unit	$132

Actual costs and activities for the month follow:

Materials used	4,200	gallons at $5.40 per gallon
Output	1,900	units
Actual labor costs	6,400	hours at $30 per hour
Actual variable overhead	$54,000

Required

Prepare a cost variance analysis for the variable costs.