Question :

Straightforward variance analysis

Andy Enterprises uses a standard costing system. The standard cost sheet for product no. 551 follows.

Direct materials: 4 units @ $6.50                $26.00

Direct labor: 8 hours @ $8.50      68.00

Variable factory overhead: 8 hours          @ $7.00 56.00

Fixed factory overhead: 8 hours @ 2.5   20.00

Total standard cost per unit $170.00

The subsequent information pertains to activity for December:

1. Direct materials acquired through the month amounted to 26,350 units at $6.40 per unit. All materials were consumed in operations.

2. Andy 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 consistently throughout the year.

4. Actual production amounted to 6,500 completed units.

Instructions:

a. Evaluate Andy's direct material variances.

b. Determine Andy's direct labor variances.

c. Determine Andy's variances for factory overhead.