What is the definition for target rate range?

Answer 1

Peaceful Corporation manufactures figurines based on the following information.

Standard costs

$20

Materials (4 ounces at $5)

$8

Direct labor (1 hour per unit)

$4

Variable overhead (based on direct labor hours)

Fixed overhead budget

$19,000

Actual results and costs

Materials purchased

Units

9,000

Cost

$39,600

Materials used in production

Finished product units

2,000

Raw material (ounces)

8,200

Direct labor hours

2,000

Direct labor cost

$20,000

Variable overhead costs

$5,980

Fixed overhead costs

$19,500

Required:

1. Prepare a performance report for Peaceful using the following headings.
2. 1. Actual Production Costs
   2. Flexible Budget Costs
   3. Flexible Budget Variances
   1. Materials usage variance
   2. Labor rate variance
   3. Labor efficiency variance
   4. Variable overhead spending variance
   5. Variable overhead efficiency variance
   6. Fixed overhead budget variance
3. Compute the following variances (show calculations).
4. Give one possible explanation for each of the six variances computed in part b.