Question

During May, Joliet Fabrics Corporation manufactured 570 units of a special multilayer fabric with the trade name Stylex. The following information from the Stylex production department also pertains to May. Direct material purchased: 18,700 yards at $1.45 per yard Direct material used: 10,200 yards at $1.45 per yard Direct labor: 2,800 hours at $9.22 per hour $ 27,115 14,790 25,816 The standard prime costs for one unit of Stylex are as follows: Direct material: 20 yards at $1.42 per yard Direct labor: 4 hours at $6.00 per hour Total standard prime cost per unit of output $28.40 24.00 $52.40 Required: Compute the following variances for the month of May. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance). 1. Direct-material price variance 2. Direct-material quantity variance 3. Direct-material purchase price variance 4. Direct-labor rate variance 5. Direct-labor efficiency variance

Answer 1

Solution

Material Price Variance	$               306.00	Unfavourable-U
Material quantity variance	$           1,704.00	Favourable-F
Direct material purchase price variance	$ 561.00	Unfavourable-U
Labor rate variance	$           9,016.00	Unfavourable-U
Labor Efficiency variance	$           3,120.00	Unfavourable-U

Working

Material purchase Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                    1.42	-	$                     1.45	)	x	18700
	-561
	Variance		$                 561.00			Unfavourable-U

.

Standard DATA for		570	Connectors
	Quantity (SQ)	Rate (SR)	Standard Cost
	[A]	[B]	[A x B]
Direct Material	( 20 yards x 570 Connectors)=11400 yards	$              1.42	$            16,188.00
Direct labor	( 4 Hour x 570 Connectors)=2280 Hour	$              6.00	$            13,680.00

.

		570	Connectors
	Quantity (AQ)	Rate (AR)	Actual Cost
Direct Material	10200	$       1.45	$          14,790.00
Direct labor	2800	$       9.22	$          25,816.00

.

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                    1.42	-	$                     1.45	)	x	10200
	-306
	Variance		$                 306.00			Unfavourable-U
Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	11400	-	10200	)	x	$              1.42
	1704
	Variance		$             1,704.00			Favourable-F
Labor Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                    6.00	-	$                     9.22	)	x	2800
	-9016
	Variance		$             9,016.00			Unfavourable-U
Labour Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	2280	-	2800	)	x	$              6.00
	-3120
	Variance		$             3,120.00			Unfavourable-U