HAC212: Intermediate Management Accounting
Hand – In Activities
Chapter 6: Variance Analysis
1. Preparing a performance report Refer to the information about Adarmes Adventures given in
Exercise 6.4. Alexis King chose to prepare a static budget based on sales of 1,800 canoes. Actual
sales were 1,850 canoes at a price of $640 each. The company incurred the following costs for
the year
Direct material
$413,700
Direct labor
205,200
Variable overhead
167,800
Fixed overhead
150,000
Total
$936,700
Required
Prepare a performance report for the year that shows the flexible budget and sales volume
variances.
2. Comprehensive variance calculations Carson Construction Consultants performs cement core
tests in its Greenville laboratory. The following standard costs for the tests have been developed
by the company’s controller, Landon Carson, based on performing 2,100 core tests per month.
Standard Price
Standard Quantity
Standard
Cost
Direct materials
Direct labor
Variable overhead
Fixed overhead
Total standard cost per test
$0.50 per pound
4 pounds
$2.00
$10 per DLH
.5 DLH
5.00
$9 per DLH
.5 DLH
4.50
$16 per DLH
.5 DLH
8.00
$19.50
At the end of March, London reported the following operational results:






The company actually performed 2,250 core tests during the month.
8,500 pounds of direct materials were purchased during the month at a total cost of
$5,600.
6,300 pounds of direct materials were used to conduct the core tests.
850 direct labor hours were worked at a total cost of $9,775.
Actual variable overhead was $7,800.
Actual fixed overhead was $15,750.
Required
a.
b.
c.
d.
e.
f.
g.
h.
Calculate the direct materials price variance for March.
Calculate the direct materials quantity variance for March.
Calculate the direct labor rate variance for March.
Calculate the direct labor efficiency variance for March.
Calculate the variable overhead spending variance for March.
Calculate the variable overhead efficiency variance for March.
Calculate the fixed overhead spending variance for March.
Prepare a memo to Landon Carson providing possible explanations for the direct
materials and direct labor variances.