Question

Exercise 21-12 Direct materials and direct labor variances LO P3 Reed Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures, Direct materials (14 lbs. Direct Tabor hrs. $15 D $3 per lb.) hr. $4 During June the company incurred the following actual costs to produce 8,100 units. Direct materials (115,500 lbs. $2.70 per lb.) Direct labor (27.600 hrs. $15.10 per hr.). $311,850 AH = Actual Hours SH = Standard Hours AR - Actual Rate SR Standard Rate ADActual Quantity SO - Standard Quantity AP Actual Price SP - Standard Price (1) Compute the direct materials price and quantity variances. (Indicate the effect of each variance by selecting for favorable. unfavorable, and no variance.) (2) Compute the direct labor rate variance and the direct labor efficiency variance indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.) < Prev 6 of 10 ! Next > e Q Search or enter address 8 / SDF * C VBNM

Answer 1

Solution a) Standard price Actual price Actual quantity Standard Quantity actual production C 8100 X 14] $ 3 $ 2.70 115 500 lbs 7 for - 113400 lbs. Material price variance (Standard price - Actual price x Actual Lauantity [3-2.70] 115500 2 $34650 favorable Material quantity Variance: oui (standard auantity - Actual quantity J x Standard price T 113400-115 500 x 3 = $6300 un favorable.

classmate Date Page Standard rate. Actual rate Actual hours worked Standard hours for Actual production IS100'X37 $15 per hour → $15.10 per hour = 27600 hours → 24300 hours. tabor rate variance: standard rate - Actual rate & Actual hours Worked 15-15.10 27600 & $2760 unfavorable Labor Effeciency Variance: Istandard hours - Actual hours x Standard rate t24300- 27600J X 15 7 $ 49500 un favorable.