Question

The following Information describos production activitles of Prichard Manufacturing Company for the year Actual direct materials used Actual direct labor used Actual units produced 380.000 1bs. for a total of $779,000 63,000 hours for a total of $s07.150 128,800 Budgoted standards for each unit produced are 3 pounds of direct material at $200 per pound and 0.5 hours of direct labor at $8.00 per hour AQ Actual Quantity SQ-Standard Quantity AP Actual Price SP-Standard Price AH=Actual Hours SH Standard Hours AR=Actual Rate SR Standard Rate (1) Compute the direct materials price and quantity variances (2) Compute the direct labor rate and efficiency variances. Indicate whether esch variance is favorable or unfavorable Complete this question by entering your answers in the tabs below Required t Required 2 Compute the direct materials price and cuantity varances Standard Cost Actual Cost 0 S 1o 2 Next

Answer 1

1)

Actual Cost								Standard Cost
AQ	*	AP		AQ	*	SP		SQ	*	SP
380000	*	$2.05		380000	*	$2.00		384000	*	$2.00
	$779000				$760000				$768000
			$19000				$8000
Direct materials price variance				$19000	Unfavorable
Direct materials quantity variance				$8000	Favorable
Total direct material variance				$11000	Unfavorable

Actual price= $779000/380000= $2.05

Standard quantity= 128000*3= 384000

2)

Actual Cost								Standard Cost
AH	*	AR		AH	*	SR		SH	*	SR
63000	*	$8.05		63000	*	$8.00		64000	*	$8.00
	$507150				$504000				$512000
			$3150				$8000
Direct labor rate variance				$3150	Unfavorable
Direct labor efficiency variance				8000	Favorable
Total direct labor variance				4850	Favorable

Actual rate= $507150/63000= $8.05

Standard hour= 128000*0.5= 64000