Question

Hutto Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures.

Direct materials (15 lbs. @ $4 per lb.)			$60
Direct labor (3 hrs. @ $15 per hr.)			45

During May the company incurred the following actual costs to produce 8,300 units.

Direct materials (128,000 lbs. @ $3.80 per lb.)		$	486,400
Direct labor (29,400 hrs. @ $15.10 per hr.).			443,940

AH = Actual Hours
SH = Standard Hours
AR = Actual Rate
SR = Standard Rate

AQ = Actual Quantity
SQ = Standard Quantity
AP = Actual Price
SP = Standard Price

(1) Compute the direct materials price and quantity variances.
(2) Compute the direct labor rate variance and the direct labor efficiency variance. Indicate whether each variance is favorable or unfavorable.

Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the direct materials price and quantity variances and classify it as favorable or unfavorable. Actual Cost Standard Cost Required 1 Required 2 > Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the direct labor rate variance and the direct labor efficiency variance. Indicate whether each variance is favorable Actual Cost Standard Cost < Required 1 Required 2 >

Answer 1

SQ = Actual units (X) Standard quantity per unit. Standard Qunatity = 8300 x 15 = 124500 Particulars Direct Material SQ L 124500 SP $ 4.00 AQ AP 128000 $ 3.80 ==>> SQ X SP - $ 498,000 SQ = Standard Quantity for Actual output SP = Standard Price per Raw material AQ = Actual Quantiity consumed AP = Actual Price per Raw material

Actual Cost Standard Cost AQ х SP AP 3.80 AQ 128000 SP 4.00 SQ 124500 128000 $ $ $ 4.00 X $486,400.00 X $ 498,000.00 $512,000.00 $25,600.00 $(14,000.00) Direct Material Price Variance Direct Material Qunatity Variance Total Direct Material Cost Variance $ 25,600.00 Favorable $(14,000.00) Unfavorable $ 11,600.00 Favorable Direct Material Price Variance Direct Material Qunatity Variance Direct Material Spending Variance = (AQ * SP) - (AQ * AP) = ( SQ * SP) - (AQ * SP) = ( SQ * SP) - (AQ * AP)

SH = Actual units (X) Standard hours per unit. Standard Hors = 8300 X 3 = 24900 Particulars Direct Labor SH 2 4900 S R 15 AH 29400 AR 15.1 ===>> SH X SR = 373500 |SH = Standard Hours per Actual Output SR = Standard Rate per Hour AHP = Actual Hours Paid AR = Actual Rate per Hour.

SR AH 29400 Actual Cost X X $443,940.00 AR $ 15.10 AH 29400 X X SH 24900 Standard Cost X X $373,500.00 SR $ 15.00 $ 15.00 $441,000.00 $(2,940.00) $(67,500.00) Direct Labor Price Variance Direct Labor Quantity Variance Total Labor Cost Variance $ (2,940.00) Unfavorable $ (67,500.00) Unfavorable $ (70,440.00) Unfavorable Direct Labor Price Variance Direct Labor Quantity Variance Total Labor Cost Variance = ( AH * SR) - (AH * AR) = ( SH * SR ) - (AH * SR) = ( SH * SR) - (AH * AR)