Question

Demizio Valley Orch Talley Orchards, Inc. (DVO), developed standard costs for direct ad direct labor. In 2015, DVO estimated the following standard costs their most well loved products, the DVO classic Grandma's large pie which had a brown sugar coating on the top of the crust as well as luding cranberry and mince ingredients in addition to the apples. for one of their most apple pie which had a Direct materials Direct labor Budgeted quantity Budgeted price 2.0 pounds $6.25 per pound 0.20 hours $13.00 per hour 13 During September, DVO produced and sold 1,100 pies using 2,300 pounds of (direct materials at an average cost per pound of $6.00 and 200 direct labor hours at an average wage of $13.25 per hour. Required: a. Compute the direct materials price and efficiency variances:

Answer 1

Materials Price Variance = (SP-AP) * AQ = (6.25-6)*2300 = 575 Favourable

Materials Quantity Variance = (SQ-AQ) * SP = (1100*2 - 2300)*6.25 = 625 Unfavorable

Labor price Variance = (SR-AR) * AH = (13 - 13.25)*200 = 50 Unfavorable

Labor efficiency variance = (SH-AH) * SR = (1100*0.20 - 200)*13 = 260 Favourable