Question

Levine Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product. Direct materials (6 pounds at $1.50 per pound) $9.00 Direct labor (1 hours at $10.00 per hour) $10.00 During the month of April, the company manufactures 150 units and incurs the following actual costs. Direct materials purchased and used (1,500 pounds) $2,400 Direct labor (160 hours) $1,584 Compute the total, price, and quantity variances for materials and labor. Total materials variance " Materials price variance " Materials quantity variance $ Total labor variance " Labor price variance " Labor quantity variance "

Answer 1

Total materials variance = (Actual quantity * Actual price) - (Standard quantity * Standard price)

= $2,400 - [(150 * 6) * $1.5]

= $1,050 Unfavorable

Materials price variance = (Actual quantity * Actual price) - (Actual quantity * Standard price)

= $2,400 - (1,500 * $1.5)

= $150 Unfavorable

Materials quantity variance = (Actual quantity * Standard price) - (Standard quantity * Standard price)

= (1,500 * $1.5) - [(150 * 6) * $1.5]

= $900 Unfavorable

Total labor variance = (Actual hours * Actual rate) - (Standard hours * Standard rate)

= $1,584 - [(150 * 1) * $10]

= $84 Unfavorable

Labor price variance = (Actual hours * Actual rate) - (Actual hours * Standard rate)

= $1,584 - (160 * $10)

= $16 Favorable

Labor quantity variance = (Actual hours * Standard rate) - (Standard hours * Standard rate)

= (160 * $10) - [(150 * 1) * $10]

= $100 Unfavorable