Question

Part of your company's accounting database was destroyed when Godzilla attacked the city. You have been able to gather the following data from your files. Reconstruct the remaining information using the available data. All of the raw material purchased during the period was used in production. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance). Round "per unit" answer values to 2 decimal places. Direct Labor Direct Material 14.00 per lb Standard price or rate per unit of input per hour Standard quantity per unit of output hours per unit Ibs per unit Actual quantity used per unit of output 2.50 hours Ibs per unit 13.00 per lb $ $ 18.00 per hour Actual price or rate per unit of input Actual output 8,500 units 8,500 units $ 61,200 F Direct-material price variance Direct-material quantity variance 44,400 F Total direct-material variance Direct-labor rate variance $ 72,250 F Direct-labor efficiency variance 51,000 F Total direct-labor variance

Answer 1

				Direct labor		Direct Material
Standard price or rate per unit of output				17	per hour	14	per lb
Standard quantity per unit of output				3	hrs per unit	7.06	lbs per unit
Actual qunatity used per unit of output				2.5	hrs.	7.2	lbs per unit
Actual price or rate per unit of output				18	per hr	13	per lb
Actual output				8,500	units	8,500	units
Direct-material price variance						61,200	F
Direct-material quantity variance						16,800	U.
Total direct-material variance						44,400	F
Direct labor-rate variance				21,250	U
Direct-labor efficiency variance				72,250	F
total direct-labor variance				51,000	F
Direct labor rate variance = direct labor efficiency variance-total direct labor variance
Direct labor rate variance					Direct materials price variance
(Actual price - standard price)*Actual hrs					(actual price -standard price)*AQ purchased
(18 -x)*21250		=	21,250		(13 - 14)*x	=	61200
382500	-21250 x	=	21250		x	=	61,200
	x	=	17			61200/8500=		7.2
Direct labor efficiency variance					Direct material quantity variance
(Actual hrs - standard hrs )*standard rate					(Actua qty - standard qty)*standard rate
(21250 - 8500*x)*17=			72,250		(61200 - 8500*x)*14 =			16,800
361250 - 144500x =		72250			856,800 - 119000x		=	16,800
x	=	(361250+72250)/144500			x =	(856800-16800)/119000
		3				7.06