Question

Exercise 11-8 a The following direct materials and direct labor data pertain to the operations of Laurel Company for the month of August. Costs Actual labor rate $16 per hour Actual materials price $110 per ton Standard labor rate $15.50 per hour Standard materials price $112 per ton Quantities Actual hours incurred and used 4,500 hours Actual quantity of materials purchased and used 1,100 tons Standard hours used 4,540 hours Standard quantity of materials used 1,085 tons (a) Compute the total, price, and quantity variances for materials and labor. Total materials variance $ FavorableUnfavorableNeither favorable nor unfavorable Materials price variance $ Neither favorable nor unfavorableFavorableUnfavorable Materials quantity variance $ FavorableNeither favorable nor unfavorableUnfavorable Total labor variance $ Neither favorable nor unfavorableFavorableUnfavorable Labor price variance $ UnfavorableFavorableNeither favorable nor unfavorable Labor quantity variance $ Neither favorable nor unfavorableUnfavorableFavorable Click if you would like to Show Work for this question: Open Show Work

Answer 1

Solution

Total Material Variance	$               520.00	Favourable-F
Material Price Variance	$           2,200.00	Favourable-F
Material quantity variance	$           1,680.00	Unfavourable-U
Total Labor variance	$           1,630.00	Unfavourable-U
Labor rate variance	$           2,250.00	Unfavourable-U
Labor Efficiency variance	$               620.00	Favourable-F

Working

Actual DATA for
	Quantity (AQ)	Rate (AR)	Actual Cost
Direct Material	1100	$ 110.00	$       121,000.00
Direct labor	4500	$     16.00	$          72,000.00

.

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$               112.00	-	$                 110.00	)	x	1100
	2200
	Variance		$             2,200.00			Favourable-F
Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	1085	-	1100	)	x	$         112.00
	-1680
	Variance		$             1,680.00			Unfavourable-U
Material Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$       121,520.00	-	$        121,000.00	)
	520
	Variance		$                 520.00			Favourable-F
Labor Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                  15.50	-	$                   16.00	)	x	4500
	-2250
	Variance		$             2,250.00			Unfavourable-U
Labour Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	4540	-	4500	)	x	$           15.50
	620
	Variance		$                 620.00			Favourable-F
Labor Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$         70,370.00	-	$           72,000.00	)
	-1630
	Variance		$             1,630.00			Unfavourable-U