Question

Shampoo Water Direct labor Standard Quantity Standard Rate 1.8 oz. $ 0.10 per oz. 16 gal. $ 0.05 per gal. 1.1 hr. $10.00 per hr. Standard Unit Cost $ 0.18 0.80 11.00 During the month of July, Collin's employees gave 360 baths. The actual results were 730 ounces of shampoo used (cost of $131.40), 6,600 gallons of water used (cost of $528), and labor costs for 300 hours (cost of $3,480). Required: 1. Calculate Suds & Cuts direct materials variances for both shampoo and water for the month of July. (Round your answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.) Shampoo Water Direct Material Price Variance Direct Material Quantity Variance 2. Calculate Suds & Cuts direct labor variances for the month of July. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable. Round your answers to nearest dollar amount.) Direct Labor Rate Variance Direct Labor Efficiency Variance

Answer 1

Answer to Question 1:

$ Answer to Question 1: SHAMPOO Standard price Actual price Standard quantity Actual quantity 0.10 per ounce 0.18 pe ounce 648 ounces 730 ounces Standard amount of material required for actual units: Actual output X standard ounce for per bath 360 X 1.8 = 648 oz Actual price Actual cost/Actual ounces consumed of shampoo $131.40/730 = $1.18 Computation of Material Quantity Variance Material Qty Variance = Standard Price X (Standard Qty consumed - Actual Qty consumed) 0.10 X (648 - 730) Material Qty Variance = $ 8.20 Unfavorable It is unfavorable because actual quantity consumed is more than standard quantity calculated for actual quantity of units produced. Computation of Material Price Variance Material price variance = Actual Qty Consumed * (Standard price - actual price) 730 X (0.1 -0.18) Material price variance = $ 58.40 Unfavorable It is unfavorable because actual price is more than standard price

Answer to Question 1:

$ Answer to Question 1: WATER Standard price Actual price Standard quantity Actual quantity 0.05 per gallon 0.08 pe ounce 5,760 gallons 6,600 gallons Standard amount of material required for actual units: Actual output X standard gallon for per bath 360 X 16 = 5,760 gallons Actual price Actual cost/Actual ounces consumed of shampoo $528/6,600 = $0.08 Computation of Material Quantity Variance Material Qty Variance = Standard Price X (Standard Qty consumed - Actual Qty consumed) 0.05 X (5,760 - 6,600) Material Qty Variance = $ 42.00 Unfavorable It is unfavorable because actual quantity consumed is more than standard quantity calculated for actual quantity of units produced. Computation of Material Price Variance Material price variance = Actual Qty Consumed * (Standard price - actual price) 6600 X (0.05 -0.08) Material price variance = $ 198.00 Unfavorable It is unfavorable because actual price is more than standard price.

Answer to Question 2:

Answer to Question 2 Standard rate $ per labour 10.00 hour per labour 11.60 hour 396 Labor Hours 300 Labor Hours Actual rate Standard hours Actual hours Standard direct labour required for actual units: Actual output X standard labour hours for per unit 360 baths X 1.1 hours = 396 hours Actual rate Actual cost/Actual hours 8 $3,480/300 = $11.60 1 5 Computation of Labour Rate Variance 5 Labour rate variance = Actual labour hours X (Standard rate - Actual rate) 300 X (10.00 - 11.60) 3 Labour rate variance = $ 480.00 Unfavorable It is adverse because actual rate is more than standard rate. 1 Computation of Labour Efficiency Variance e Labour efficiency variance = Standard Rate X (Standard Labour Hours - Actual Labour hours) $10.00 X (396 - 300) Labour efficiency variance = $ 960 Favorable 5 It is favorable because actual labour hours is less than standard labour hours calculated for actual quantity of units produced. 3 5

Final Answer:

Final Answer: Question 1 Shampoo Water Direct Material Price Variance $ 8.20 U $ 42.00 U Direct Material Quantity Variance $ 58.40 U $198.00 u Question 2 Direct Material Price Variance $ Direct Material Quantity Variance $ 480 U 960 F