Question

utto Corp, has set the following standard direct materials and direct labor costs per unit for the product it manufactures. Direct materials (15 lbs. $3 per lb.) Direct labor (4 hrs. $15 per hr.) uring May the company incurred the following actual costs to produce 8,700 units. Direct materials (134,000 lbs. $2.80 per lb.) Direct labor (39,500 hrs. $15.10 per hr.). $375,200 596,450 Q-Actual Quantity Q - Standard Quantity P- Actual Price P Standard Price H-Actual Hours H - Standard Hours R - Actual Rate R - Standard Rate ) Compute the direct materials price and quantity variances 2) Compute the direct labor rate variance and the direct labor efficiency variance Indicate whether each variance is favorable or nfavorable Complete this question by entering your answers in the tabs below. < Prev 7 of 17 !! Next >

Answer 1

Answer: - Actual cost All X AP AQ X SP Standard cost SQ XSP 130500 x $3 C8700X15) = $391,500 134000X $ 2.80 = $375,200 134000x $3 l = $ 402000 Direct material price variance - (SPX AQ)-(OPXAO) = $402000 – $375,200 = $26,800 favourable Direct Quantity matericu ale my variance = AC Sp) = $ 391;500 – $4021000 = 10000 Unfalcourable

© Labour le yaouances or Actual cost AX AR Standord cost SH X SR 39500 X $1510 AH 'X SR 39.100 x $15 = $592,500 34800 x $15 (8700x4) $ 522,000 = $596,450 Direct labour rate variance = SRXAH) - CAHYAR) = 592,500 - 596,437 = 3950 On Favorable Direct laboug efficiency oriunde = (SHXSR) - Ca 4x SR) = $512,000 - 592,100 = 70,500 Unfavourable