Upton Company Uses a Standard Cost System for Its Single

question 6

Essay

Upton Company uses a standard cost system for its single product. The following data are available:
Actual experience for the current year:
$$\begin{array} { l c } \text { Purchases of raw materials } ( 15,000 \text { yards at } \$ 13 \text { per yard } ) & \$ 195,000 \\\text { Raw materials used } & 12,000 \text { yards } \\\text { Direct labor costs } ( 10,200 \text { hours at } \$ 10 \text { per hour } ) & \$ 102,000 \\\text { Actual variable overhead cost } & \$ 84,150 \\\text { Units produced } & 12,600 \text { units }\end{array}$$
Standards per unit of product:
$$\begin{array} { | l | l | } \hline \text { Raw materials } & 1.1 \text { yards at } \$ 15 \text { per yard } \\\hline \text { Direct labor } & 0.80 \text { hours at } \$ 9.50 \text { per hour } \\\hline \text { Variable overhead } & \$ 8 \text { per direct labor hour } \\\hline\end{array}$$
Required:
Compute the following variances for raw materials, direct labor, and variable overhead, assuming that the price variance for materials is recognized at point of purchase:
a. Direct materials price variance.
b. Direct materials quantity variance.
c. Direct labor rate variance.
d. Direct labor efficiency variance.
e. Variable overhead rate variance.
f. Variable overhead efficiency variance.

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Definitions:

Corporate Hierarchy

The structured organization of job positions and authority within a corporation, usually depicted as a pyramid with the highest authority at the top.

Upper Management

The highest level of executives who are responsible for the strategic direction and decision-making in an organization.

Corporate-wide Events

Events organized on a company-wide scale, involving all employees and possibly external stakeholders, aiming to build culture, share information, or celebrate achievements.

Corporate Cultures

The shared values, beliefs, and practices that characterize an organization and influence its behavior and decision-making.