Question

P&G company produces large The standards for materials and labor costs to manufacture I bag are as follows: size bags for the use of tourists. Company uses standard costing system lo «öHöl 0sts. Direct materials: 7.2 lbs. per bag @ $5 per lb. Direct labor: 0.4 hours per bag @$20 per hour During the last month, P&G produced 2,500 large bags. 20,000 lbs. of direct materials were purchased @ $4.8 per lb They used all direct materials to make the 2,500 large bags 900 direct labor hours were recorded @ $24 per hour. Required: Compute the Total Variance, Price Variance and Quantity Variance for direct materials ute Total Variance, Rate Variance and Efficiency Variance for direct labor. 3.

Answer 1

Actual quantity of materials used at standard price (20,000 lbs x S5) Standard quantity of materials allowed at standard price ( 18,000 lbs x $5) $ 100,000 90,000 Direct materials quantity variance S 10,000U

Actual direct labor hours worked at standard rate (900 hours $20) Standard direct labor hours allowed at standard rate (*1,000 hours × $20) S 18,000 20,000 Direct labor efficiency variance $ 2,000F

Total material variance = Direct material price variance + Direct Material Quantity variance

Total Labour variance = Direct labour rate variance + Direct labour efficiency variance.

Hope you can understand , Due to Time running i have posted formula for the above.