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 Quantity or Hours 6.40 pounds .40 hours Direct materials Direct labor Standard Price or Rate $ 3.00 per pound $11.00 per hour $19.20 $ 4.00 During the most recent month, the following activity was recorded a. Twelve thousand four hundred pounds of material were purchased at a cost of $2.90 per pound. b. The company produced only 1.240 units, using 11,160 pounds of material (The rest of the material purchased remained in raw materials inventory.) c. 596 hours of direct labor time were recorded at a total labor cost of $7,152 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.) Materials price variance Materials quantity variance

Answer 1

Materials Price Variance = (SP-AP) *AQ

= (3-2.90)*12,400

= 1240 F

Materials Quantity Variance = (SQ-AQ) *SP

= (1240*6.40 - 11,160)*3

= 9672 U