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Homework answers / question archive / The following materials standards have been established for a particular product: Standard quantity per unit of output 3
The following materials standards have been established for a particular product:
Standard quantity per unit of output 3.6 metre
Standard price $10.20 per metre
The following data pertain to operations concerning the product for the last month:
Actual materials purchased 7,100 metres
Actual cost of materials purchased $68,515
Actual materials used in production 6,600 metres
Actual output 1,780 units
The following labour standards have been established for a particular product:
Standard labour hours per unit of output 2.8 hours
Standard labour rate $11.50 per hour
The following data pertain to operations concerning the product for the last month:
Actual hours worker 6,900 hours
Actual total labour cost $80,385
Actual output 2,300 units
Required:
a) What was the materials price variance for the month?
b) What was the materials quantity variance for the month?
c) What was the labour rate variance for the month?
d) What was the labour efficiency variance for the month?
(A) Material Price variance = (Actual quantity * Actual price ) - (Actual quantity * Standard price)
= $68,515 − (7,100 meters * $10.20 per meter)
= $68,515 - $72,420
= $3,905 F
(B) Standard quantity = 1,780 units * 3.6 meter per unit = 6,408 meters
Materials quantity variance = (Actual quantity - Standard quantity) * Standard price
= (6,600 meters - 6,408 meters)* $10.20 per meter
= 192 meters * $10.20 per meter
= $1,958.40 U
(C) Labour Rate Variance = (Actual Hours * Actual Rate) - (Actual Hours * Standard Rate)
= $80,385 - (6,900*$11.50)
= $80,385 - $79,350
= $1,035 U
(D) Labour Efficiency Variance = (Standard Hours for Actual Output - Actual Hours Worked)* Standard Rate per hour
= ((2,300 units*2.8 hours) - 6,900)*$11.50
= (6,440 - 6,900)*$11.50
= 460*$11.50
= $5,290 U
