Question

Direct Materials and Direct Labor Variances At the beginning of June, Bezco Toy Company budgeted 14,000 toy action figures to be manufactured in June at standard direct materials and direct labor costs as follows: Direct materials Direct labor $34,300 10,500 Total $44,800 The standard materials price is $0.7 per pound. The standard direct labor rate is $15 per hour. At the end of June, the actual direct materials and direct labor costs were as follows: Actual direct materials $31,000 Actual direct labor 9,500 Total $40,500 There were no direct materials price or direct laborate variances for June. In addition, assume no changes in the direct materials inventory balances in June. Bezco Toy Company actually produced 12,300 units during June. Determine the direct materiais quantity and direct labor time variances. Round your per unit computations to two decimal places, if required. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number Direct materials quantity variance Direct labor time variance

Answer 1

Standard quantity of direct materials for 14000 units = Standard direct materials cost for 14000 units / Standard materials price per pound = 34300 / 0.7	49000
Standard quantity of direct materials per unit = Standard quantity of direct materials for 14000 units / 14000 = 49000 / 14000	3.5
Standard quantity of direct materials for actual production = Actual production of units * Standard quantity of direct materials per unit = 12300 * 3.5	43050
As there is no direct materials price variance, the actual price of direct materials is same as that of standard.
Actual quantity of direct materials used = Actual cost of direct materials / Actual price = 31000 / 0.7	44286
Direct materials quantity variance = ( Actual quantity - Standard quantity ) * Standard rate = ( 44286 - 43050 ) * 0.7	865	Unfavorable
Standard hours of direct labor for 14000 units = Standard direct labor cost for 14000 units / Standard direct labor rate per hour = 10500 / 15	700
Standard hours of direct labor per unit = Standard hours of direct labor for 14000 units / 14000 = 700 / 14000	0.05
Standard hours of direct labor for actual production = Actual production of units * Standard hours of direct labor per unit = 12300 * 0.05	615
As there is no direct labor rate variance, the actual rate of direct labor is same as that of standard.
Actual hours of direct labor used = Actual cost of direct labor / Actual rate = 9500 / 15	633
Direct labor time variance = ( Actual hours - Standard hours ) * Standard rate = ( 633 - 615 ) * 15	270	Unfavorable