Question

The following infotmation describes production activities of the Central Corp.: Raw materials used...... .......... . 84.05 per lb. 16,000 lbs. ---- Factory payroll.. . ... 5,545 hours for a total of $72,085 30,000 is ware completed during the year Badgood standards for each unit produced: 1/2 lb. of mw material at $4.15 per b. 10 minutes of direct laborat $12.50 per hour Compute the direct materials price and quantity and the direct laborate and efficiency variances. Indicato whothair coch vacinco is favorable or inforable.

Answer 1

Materials price variance = (Standard price - actual price) x Material purchased
= {4.15 - $4.05} x 16000 = $1,600 Favorable

Materials quantity variance = (Standard quantity - actual quantity used) x standard price
= {(30000*1/2) - 16,000} x $4.15 = $4150 Unfavorable

2. Labor rate variance = (Standard rate - actual rate) x Actual hours used
= {12.50 - ($72085/5545)} x 5545 = $2772.5 Unfavorable

Labor efficiency variance = (Standard hours - actual hours) x Standard rate
= {(30000*10/60) - 5545} x $12.50 = $6812.5 Unfavorable