Question

uring May, Joliet Fabrics Corporation manufactured 510 units of a special multilayer fabric with the trade name Stylex. The following information from the Stylex production department also pertains to May.

Direct material purchased: 18,100 yards at $1.39 per yard	$	25,159
Direct material used: 9,600 yards at $1.39 per yard		13,344
Direct labor: 2,200 hours at $9.16 per hour		20,152

The standard prime costs for one unit of Stylex are as follows:

Direct material: 20 yards at $1.36 per yard	$	27.20
Direct labor: 3 hours at $6.00 per hour		18.00
Total standard prime cost per unit of output	$	45.20

Required:

Compute the following variances for the month of May. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).

1.	Direct-material price variance	not attempted	Unfavorableselected answer correct
2.	Direct-material quantity variance	not attempted	Favorableselected answer correct
3.	Direct-material purchase price variance	not attempted	Unfavorableselected answer correct
4.	Direct-labor rate variance	not attempted	Unfavorableselected answer correct
5.	Direct-labor efficiency variance	not attempted	Unfavorable

Answer 1

Answer

• All working forms part of the answer

Direct Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                        1.36	-	$                       1.39	)	x	9600
	-288
	Variance		$                  288.00			Unfavourable-U
Direct Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	10200	-	9600	)	x	$                           1.36
	816
	Variance		$                  816.00			Favourable-F

Direct Material Purchase Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                        1.36	-	$                       1.39	)	x	18100
	-543
	Variance		$                  543.00			Unfavourable-U

Direct Labor Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                       6.00	-	$                       9.16	)	x	2200
	-6952
	Variance		$              6,952.00			Unfavourable-U
Direct Labour Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	1530	-	2200	)	x	$                           6.00
	-4020
	Variance		$              4,020.00			Unfavourable-U

• Answers summarised

1.	Direct-material price variance	288	Unfavorable
2.	Direct-material quantity variance	816	Favorables
3.	Direct-material purchase price variance	543	Unfavorable
4.	Direct-labor rate variance	6952	Unfavorable
5.	Direct-labor efficiency variance	4020	Unfavorable