Question

Check my work Exercise 08-15 Direct materials and direct labor variances LO P3 The following describes production activities of Mercer Manufacturing for the year Ketual direct materials used Actual direct labor used Actual units produced 27,000 lbs. at $4.75 per lb. 8,600 hours for a total of $172,860 51.000 Budgeted standards for each unit produced are 0.50 pound of direct material at $4.70 per pound and 10 minutes of direct labor at $21.00 per hour. AH - Actual Hours SH - Standard Hours AR - Actual Rate SR Standard Rate AQ - Actual Quantity SQ - Standard Quantity AP = Actual Price SP = Standard Price (1) Compute the direct materials price and quantity variances and classify each as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance. Round "Cost per unit" answers to 2 decimal places.) (2) Compute the direct labor rate and efficiency variances and classify each as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.) Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the direct labor rate and efficiency variances and classify each as favorable or unfavorable. (Do not round intermediate calculations.) Actual Cost Standard Cost

Answer 1

Actual Cost AQ X AP 27000 | 4.75 128250 AQ 27000 X X 126900 SP 4.70 Standard Cost SQ X ISP 25500 X 4.70 119850 1350 7050 Direct Material Price Varaince Direct Material Quantity Varaince Total Direct Material Varaince 1350 7050 8400 Unfavorable Unfavorable Unfavorable Actual Cost AH X 8600 X 172860 AR 20.10 AH X L SR 8600 X 21.00 180600 Standard Cost SH X SR 8500 X 21.00 178500 7740 2100 Direct Labor Rate Varaince Direct Labor Efficiency Variance Total Direct Labor Variance AH = (172860/8600)= 20.10 SH= ( 51000*1/6)= 8500 7740 2100 5640 Favorable Unfavorable Favorable