Question

how to solve each with the formulas ..

Betty's Bakery has the following standard cost sheet for one unit of its most popular cake: Direct materials Direct labor 1.2 pounds 0.8 hours $ 1.50 per pound $12.00 per hour During the month of May, the company made 720 cakes and incurred the following actual costs. Direct materials purchased and used (1.020 pounds) $1,326 Direct labor (780 hours) $8.970 Required: 1. Calculate the direct materials price variance 2. Calculate the direct materials quantity variance 3. Calculate the direct materials variance. 4. Calculate the direct labor rate variance 5. Calculate the direct labor efficiency variance 6. Calculate the direct labor spending variance (For all requirements, Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" fc effect i.e., zero variance).) $ S 1.006 F 306 1 Direct materials price variance 2. Direct materials quantity vanance 3 Total direct materials spending variance 4 Direct laborate variance 5 Direct labor efficiency variance 6 Total direct labor spending variance < Prey 2 of 2 Next > search

Answer 1

1. Direct material price variance = Actual quantity*standard price - Actual quantity*actual price

Direct material price variance = 1,020*$1.50 - $1,326

Direct material price variance = $1,530 - 1,326 = $204 Favorable

2. Direct material quantity variance = Standard quantity*standard price - Actual quantity*standard price

Standard quantity = 720*1.2 = 864 pounds

Direct material efficiency variance = 864*$1.50 - 1,020*$1.50

Direct material efficiency variance = $1,296 - 1,530 = $234 Unfavorable

3. Total direct material spending variance = $234 U + 204 F = $30 Unfavorable

4. Direct labor rate variance = Actual hours*standard rate - Actual hours*actual rate

Direct labor rate variance = 780*$12 - $8,970

Direct labor rate variance = $9,360 - 8,970 = $390 Favorable

5. Direct labor efficiency variance = Standard hours*standard rate - Actual hours*standard rate

Standard hours = 720*0.8 = 576 hours

Direct labor efficiency variance = 576*$12 - 780*$12

Direct labor efficiency variance = $6,912 - 9,360 = $2,448 Unfavorable

6. Total direct labor spending variance = $2,448 U + 390 F = $2,058 Unfavorable