Question

Exercise 21-11 Direct materials and direct labor variances LO P3

Hutto Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures.

Direct materials (15 lbs. @ $4 per lb.)			$60
Direct labor (2 hrs. @ $15 per hr.)			30

During May the company incurred the following actual costs to produce 8,400 units.

Direct materials (128,600 lbs. @ $3.80 per lb.)		$	488,680
Direct labor (20,000 hrs. @ $15.10 per hr.).			302,000

AH = Actual Hours
SH = Standard Hours
AR = Actual Rate
SR = Standard Rate

AQ = Actual Quantity
SQ = 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. Round "Rate per hour" answers to 2 decimal places.)

Answer 1

Answert standard cost Actual Cost AQ I lap_L 128,600 3.80 SP AQ 128,600 126000 8H00x15 488680 5/4400 504000 25RI 10400 Direct Malērial Price variance is 25,790 Direct Material quantily variance is 10400 Total Direct Materials variance is 15320 Favourable un favourable Favourable. 2) actual cost AR SR SH SR AH 2000 15.10 15 300000 standard cosla AH 20000 16800 8400x2 302DOC 1252000 2000 48000 Direct Labor rate variance is 2000 unfavourable Direct Labor effeciency variance is 48000 un favourable Total Direct Labor variance is 50,000 cu favowsable