Question

Suds & Cuts is a local pet grooming shop owned by Collin Bark. Collin has prepared the following standard cost card for each dog bath given Shampoo Water Direct labor Standard Quantity 2.5 Oz. 23 gal. 1.45 hr. Standard Rate $ @.10 per oz. $ 0.04 per gal. $11.00 per hr. Standard Unit Cost $ 0.25 0.92 15.95 During the month of July, Collin's employees gave 430 baths. The actual results were 765 ounces of shampoo used (cost of $153.00). 7,300 gallons of water used (cost of $584), and labor costs for 370 hours (cost of $4,551). Required: 1. Calculate Suds & Cuts direct materials variances for both shampoo and water for the month of July. 2. Calculate Suds & Cuts direct labor variances for the month of July Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate Suds & Cuts direct materials variances for both shampoo and water for the month of July (Round your answers to 2 decimal places, indicate the effect of each variance by selecting for favorable, u" for unfavorable, and "None" for no effect (.e., zero variance)

Answer 1

Requirement 1:

Shampoo:

Standard quantity allowed = Actual number of baths * Standard quantity per bath
Standard quantity allowed = 430 * 2.50
Standard quantity allowed = 1,075 ounces

Direct material price variance = Actual materials cost - Actual quantity used * Standard price per ounce
Direct material price variance = $153.00 - 765 * $0.10
Direct material price variance = $76.50 Unfavorable

Direct material quantity variance = Standard price per ounce * (Actual quantity used - Standard quantity allowed)
Direct material quantity variance = $0.10 * (765 - 1,075)
Direct material quantity variance = $31.00 Favorable

Water:

Standard quantity allowed = Actual number of baths * Standard quantity per bath
Standard quantity allowed = 430 * 23
Standard quantity allowed = 9,890 gallons

Direct material price variance = Actual materials cost - Actual quantity used * Standard price per ounce
Direct material price variance = $584 - 7,300 * $0.04
Direct material price variance = $292 Unfavorable

Direct material quantity variance = Standard price per ounce * (Actual quantity used - Standard quantity allowed)
Direct material quantity variance = $0.04 * (7,300 - 9,890)
Direct material quantity variance = $103.60 Favorable

Requirement 2:

Standard labor hours allowed = Actual number of baths * Standard labor hours per bath
Standard labor hours allowed = 430 * 1.45
Standard labor hours allowed = 623.50 hours

Direct labor rate variance = Actual direct labor cost - Actual labor hours * Standard labor rate per hour
Direct labor rate variance = $4,551 - 370 * $11.00
Direct labor rate variance = $481 Unfavorable

Direct labor efficiency variance = Standard labor rate per hour * (Actual labor hours - Standard labor hours allowed)
Direct labor efficiency variance = $11.00 * (370 - 623.50)
Direct labor efficiency variance = $2,788.50 Favorable