Question

The following direct materials and direct labor data pertain to the operations of Laurel Company for the month of August.

Exercise 25-6 The following direct materials and direct labor data pertain to the operations of Laurel Company for the month of August. Costs Actual labor rate Actual materials price Standard labor rate Standard materials price $13 per hour $220 per ton $12.50 per hour $224 per ton Quantities Actual hours incurred and used Actual quantity of materials purchased and used Standard hours used Standard quantity of materials used 4,200 hours 1,600 tons 4,280 hours 1,580 tons (a) Compute the total, price, and quantity variances for materials and labor. Total materials variance 4 Materials price variance 1 Materials quantity variance Total labor variance A Labor price variance A Labor quantity variance A

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and format. For detailed answer refer to the supporting sheet.

A B Answer a) Total Material Varianceactual cost standard cost 2 3 (220*1600)-(224*1580) = S 1920 Favourable 4 6 B) Material Price Variance (Actual Price- standard Price) actual qty 7 (220-224)*1600 $ 6400 Favourable 8 10 C) Material quantity variance (actual qty- standard qty)* standard rate 11 (1600-1580)*224 12 S 4480 Unfavourable 14 D) Total labour variance actual cost standard cost 15 (13*4200) -(12.5*4280) 16 $1100 Unfavourble 18 e)Labour Price variance (actual price- standard price)* actual hours 19 13-12.5)*4200 202100 Unfavourable 22 F) Labour effeciency variance (actual hours- standard hours) standard rate 23 4200-4280) 12.5 $ 1000 favourable 24 26 Thus Final answer 1,920 Favourable 6,400 Favourable 4,480 Unfavourable 1,100 Unfavourable 2,100 Unfavourable 27 Total Material Variance 28 Material Price Variance 29 Material Quantity Variance 30 Total Labour Variance 31 Labour Price Variance 32 Labour Effeciency Variance 1,000 Favourable al al