Material Price Variance (AP-SP) X AQ
Material Price Variance (AP-SP) X AQ
month and a materials quantity variance for the plates used last month.
Given:
Actual Quantity 12,000.00
Actual Price 2.35
Standard Price 2.50
Solution:
AP 2.35
SP 2.50
Diff. (0.15)
AQ 12,000.00
Materials Price Variance (1,800.00) FAVORABLE
Given:
Actual Quantity 10,500.00 *12,000-1,500 on hand
Standard Quantity 8,400.00 *{1,800 (Blood test) + 2,400 (Smears)} x
Standard Price 2.50
Solution:
AQ 10,500.00
SQ 8,400.00
Diff. 2,100.00
SP 2.50
Materials Qty Variance 5,250.00 UNFAVORABLE
Requirement 2:
For labor cost in the lab:
a. Compute a labor rate variance and a labor efficiency variance.
b. In most hospitals, one-half of the workers in the lab are senior technicians and one-half are assistants.
In an effort to reduce costs, Valley View Hospital employs only one-fourth senior technicians and three-fo
Would you recommend that this policy be continued? Explain.
Given:
Actual Hour 1,150.00
Actual Rate 12.00
Standard Rate 14.00
Solution:
AR 12.00
SR 14.00
Diff. (2.00)
AH 1,150.00
Labor Rate Variance (2,300.00) FAVORABLE
Given:
Standard Rate 14.00
Actual Hour 1,150.00
Standard Hour 900.00 *1,800 x 0.3 (Blood test) + 2,400 x 0.15 (
Solution:
AH 1,150.00
SH 900.00
Diff. 250.00
SR 14.00
Labor Efficiency Variance 3,500.00 UNFAVORABLE
B. Continuation of the policy is not recommended. Although the hospital was able to save from
labor rate which is evident with our computation of the labor rate variance, the effect of
inefficiency is much more damaging and the savings from rate variance cannot suffice the
effect of inefficiency which is also showed and very evident with our computations of
materials quantity variance and labor efficiency variance, as both being unfavorable. With this
we can conclude, that since assisstant technicians are the ones handling most of the tests,
there are materials wasted as well as the time consumed in doing a test is higher than the
standard time a test should be done. Efficiency should be considered here and one thing to
ensure efficiency is to hire competent and efficient technicians.
Given:
Actual Quantity 1,150.00 *based on direct labor hours
Actual VOH 7,820.00
VOH Rate 6.00
Solution:
Actual VOH 7,820.00
AQ x VOH Rate 6,900.00
VOH Spending Variance 920.00 UNFAVORABLE
VOH Efficiency Variance = (AH-SH) x VOH Rate
Given:
Actual Hour 1,150.00
Standard Hour 900.00
VOH Rate 6.00
Solution:
VOH Rate x AQ 6,900.00
VOH Rate x SQ 5,400.00
VOH Efficiency Variance 1,500.00 UNFAVORABLE
500 on hand
lood test) + 2,400 (Smears)} x 2
Given:
Actual Quantity 64,000.00
Actual Price 8.55
Standard Price 8.45
Solution:
AP 8.55
SP 8.45
Diff. 0.10
AQ 64,000.00
Materials Price Variance 6,400.00 UNFAVORABLE
Given:
Actual Quantity 64,000.00
Standard Quantity 60,000.00
Standard Price 8.45
Solution:
AQ 64,000.00
SQ 60,000.00
Diff. 4,000.00
SP 8.45
Materials Qty Variance 33,800.00 UNFAVORABLE
Requirement 2. Compute the direct labor spending and efficiency variances for the year.
Given:
Actual Hour 45,000.00
Actual Rate 7.80
Standard Rate 8.00
Solution:
AR 7.80
SR 8.00
Diff. (0.20)
AH 45,000.00
Labor Rate Variance (9,000.00) FAVORABLE
Labor Efficiency Variance = (AH-SH) x SH
Given:
Standard Rate 8.00
Actual Hour 45,000.00
Standard Hour 42,000.00
Solution:
AH 45,000.00
SH 42,000.00
Diff. 3,000.00
SR 8.00
Labor Efficiency Variance 24,000.00 UNFAVORABLE
Given:
Actual Quantity 45,000.00 *based on direct labor hours
Actual VOH 108,000.00
VOH Rate 2.50
Solution:
Actual VOH 108,000.00
AQ x VOH Rate 112,500.00
VOH Spending Variance (4,500.00) FAVORABLE
Given:
Actual Hour 45,000.00 *based on direct labor hours
Standard Hour 42,000.00
VOH Rate 2.50
Solution:
VOH Rate x AQ 112,500.00
VOH Rate x SQ 105,000.00
VOH Efficiency Variance 7,500.00 UNFAVORABLE
Solution:
Actual FOH 211,800.00
Budgeted FOH 210,000.00
FOH Spending Variance 1,800.00 UNFAVORABLE
Given:
Budgeted FOH 210,000.00
FOH Rate 6.00
Standard Hour 42,000.00
Requirement 3. Total the variances you have computed, and compare the net amount with the P18,000 mentioned by t
Do you agree that bonuses should be given to everyone for good cost control during the year. Explain.
Yes, I agree. Total variance of 18,000 is exactly the same amount the President has announced. With this, bo
really be given to the employees for job well done in the effective cost control done for the year.
with the P18,000 mentioned by the president.
rol during the year. Explain.