Question

Required information [The following information applies to the questions displayed below.] A manufactured product has the following information for June. Standard Actual Direct materials 5 lbs. @ $9 per lb. 40,400 lbs. @ $9.20 per lb. Direct labor 3 hrs. @ $15 per hr. 23,700 hrs. @ $15.60 per hr. Overhead 3 hrs. @ $12 per hr. $ 294,800 Units manufactured 8,000 Compute the direct materials price variance and the direct materials quantity variance. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance. Round "Cost per unit" answers to 2 decimal places.) AQ = Actual Quantity SQ = Standard Quantity AP = Actual Price SP = Standard Price

Direct materials Direct labor Overhead Units manufactured Standard 5 lbs. @ $9 per lb. 3 hrs. @ $15 per hr. 3 hrs. @ $12 per hr. Actual 40,400 lbs. @ $9.20 per lb. 23,700 hrs. @ $15.60 per hr. $294,800 8,000 Compute the direct materials price variance and the direct materials quantity variance. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance. Round "Cost per unit" answers to 2 decimal places.) AQ = Actual Quantity SQ = Standard Quantity AP = Actual Price SP = Standard Price Actual Cost Standard Cost

Answer 1

Actual quantity of material used = 40,400 lb

Actual price of material = $9.20 per lb

Standard price = $9 per lb

Standard quantity = 5 lb

Actual output = 8,000 units

Hence, standard quantity for actual output = 8,000 x 5

= 40,000 lb

Direct material price variance = Actual quantity x (Standard price - Actual price)

= 40,400 x (9 - 9.20)

= $8,080 (Unfavorable)

Direct material quantity variance = Standard price x (Standard quantity - Actual quantity)

= 9 x (40,000 - 40,400)     

= $3,600 (Unfavorable)

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