Question

During June, Danby Company's material purchases amounted to 6,700 pounds at a price of $8.00 per pound. Actual costs incurred in the production of 2,300 units were as follows: Direct labor: Direct material: $134,420 ($18.80 per hour) $ 39,200 ($8.00 per pound) The standards for one unit of Danby Company's product are as follows: Direct Labor: Quantity, 3 hours per unit Rate, $18.70 per hour Direct Material: Quantity, 2 pounds per unit Price, $7.70 per pound Required: Compute the direct-material price and quantity variances, the direct-material purchase price variance, and the direct-labor rate and efficiency variances. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).) Answer is complete but not entirely correct. Direct-material price variance Direct-material quantity variance Direct-material purchase price variance Direct-labor rate variance Direct-labor efficiency variance $ $ $ $ $ 1,470 2,310 (3,780) 715 4,675 Unfavorable Unfavorable Unfavorable Unfavorable Unfavorable

Answer 1

Direct -materials purchase price variance = Quantity purchased*(Actual price-Standard price)

Direct -materials purchase price variance = 6700*(8.00-7.70)= 2010 Unfavorable

Direct -materials purchase price variance = 2010 Unfavorable