Question

Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below: Standard Standard Price Quantity or Hours Standard or Rate $ 2.50 per pound $14.50 per hour Cost 7.10 pounds 0.50 hours Direct materials Direct labor $17.75 $ 7.25 During the most recent month, the following activity was recorded: a. Thirteen thousand eight hundred pounds of material were purchased at a cost of $2.40 per pound. b. The company produced only 1,380 units, using 12,420 pounds of material. (The rest of the material purchased remained in raw materials inventory.) c. 790 hours of direct labor time were recorded at a total labor cost of $9,480 Required: Compute the materials price and quantity variances for the month. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.) Materials price variance Materials quantity variance

Answer 1

Standard Rate Actual Rate Qty. Unit cost Qty. Unit cost Direct materials 2.5 24,495 12,420 9,798 (1380*7.10) 2.4 29,808 Direct materials price variance = (SP-AP) *AQ 1,242 (F) Direct materials quantity variance = (SQ-AQ) *SP -6,555 (U) || Direct materials spending variance = Standard cost - Actual cost -5,313 (U)