Ralston Corporation Makes a Product with the Following Standard Costs

question 81

Essay

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.

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Definitions:

Initiating Structure

A leadership behavior that involves setting up clear roles, tasks, and goals, and organizing work processes to achieve objectives.

Two-Way Communication

A form of communication where information flows in two directions, allowing for feedback and interaction between sender and receiver.

Mutual Trust

A reciprocal belief in the reliability, truth, or ability of others, which forms the foundation of cooperative relationships.

Respect

Showing consideration, understanding, and valuation of individuals' differences, qualities, and rights.