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Homework answers / question archive / 1
1. value 3.00 points Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below: Standard Quantity or Standard Price Hours or Rate 6.40 pounds $ 1.70 per pound 0.40 hours $ 14.00 per hour Standard Cost $ 10.88 $ 5.60 Direct materials Direct labor During the most recent month, the following activity was recorded: a. 18,500 pounds of material were purchased at a cost of $1.40 per pound. b. All of the material purchased was used to produce 2,500 units of Zoom. C. 800 hours of direct labor time were recorded at a total labor cost of $13,600. Required: 1. Compute the materials price and quantity variances for the month. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Direct materials price variance Direct materials quantity variance
2. Compute the labor rate and efficiency variances for the month. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Direct labor rate variance Direct labor efficiency variance
1)
Standard quantity per unit = 6.40 pounds
Actual output = 2500 units
Total standard quantity for actual output = Standard quantity per unit x Actual output
= 6.40 pounds x 2500 units = 16000 pounds
Actual quantity used = 18500 pounds
Standard rate per pound = $1.7
Actual rate = $1.40 per pound
Direct materials price variance = (Standard rate - Actual rate) x Actual quantity
= ($1.7 - $1.4) x 18500
= $0.3 x 18500 = $5550 favorable
Direct materials quantity variance = (Standard quantity - Actual quantity) x Standard rate
= (16000 pounds - 18500 pounds) x $1.7
= 2500 pounds x $1.7 = $4250 unfavorable
|
Direct materials price variance |
$5550 |
F |
|
Direct materials quantity variance |
$4250 |
U |
2)
Standard hours per unit = 0.40 pounds
Actual output = 2500 units
Total standard hours for actual output = Standard hours per unit x Actual output
= 0.40 hours x 2500 units = 1000 hours
Actual hours = 800 hours
Standard rate per hour = $14
Actual rate per hour = Total labor cost/Total direct labor hours = $13600/800 = $17
Direct labor rate variance = (Standard rate - Actual rate) x Actual hours
= ($14 - $17) x 800
= $3 x 800 = $2400 unfavorable
Direct labor efficiency variance = (Standard hours - Actual hours) x Standard rate
= (1000 - 800) x $14
= 200 x $14 = $2800 favorable
|
Direct labor rate variance |
$2400 |
U |
|
Direct labor efficiency variance |
$2800 |
F |
