Homework 12: Direct cost variances #1 Plant, LLC manufactures stone planters

1) Computation of standard and actual quantity of materials per planter, standard and actual direct labor hours per planter:

Standard Quantity Of Material Per Planter:

Standard material = Budgeted Unit * Standard Quantity * Standard Price Per Pound

$420,000 = 70,000 * SQ * $2

$420,000 = $140,000 * SQ

SQ = $420,000/$140,000= 3 Per Pound

So, Standard Quantity is 3 per pound.

Actual Quantity Of Material Per Planter:

Actual material = Actual  Unit * Actual Quantity * Actual Price Per Pound

$556,875 = 90,000 * AQ * $ 2.25

$556,875 = 202,500 * AQ

AQ = $556,875 / 202,500 = 2.75 Per Pound

So, Actual Quantity is 2.75 per pound.

Standard Direct Labor Hour Per Planter:

Standard Direct Labor  = Budgeted Unit * Standard Hour * Standard Rate Per Hour

$455,000 =70,000 * SH * $13

$455,000= 910,000 * SH

SH =$455,000 / 910,000

SH= 0.5 Hour

So, Standard Hour is 0.5

Actual Direct Labor Hour Per Planter:

Actual Direct Labor  = Actual Unit * Actual Hour * Actual Rate Per Hour

$729,000 =90,000 * SH * $13.50

$729,000= 1,215,000 * SH

AH = $729,000 / 1,215,000

AH= 0.6 Hour

So, Actual Hour is 0.6

2) Computation of direct materials price and efficiency variances:

Direct Material Price Variance = (Standard Price - Actual Price)*Actual Quantity

= ($2-$2.25)*247,500

= -$61,875 Unfavorable

Direct Material Efficiency Variance = (Standard Quantity-Actual Quantity)*Standard Price

= (270,000-247,500)*$2

= 45,000 Favorable

3) Computation of direct labor rate and efficiency variances:

Direct Labor Rate Variance = (Standard Rate-Actual Rate)*Actual Hours 

= ($13-$13.5)*54,000

= -$27,000 Unfavorable

Direct Labor Efficiency Variance = (Standard Hours-Actual Hours)*Standard Rate

= (45,000-54,000)*$13

= -$117,000 Unfavorable