Question

The following information describes production activities of Mercer Manufacturing for the year Actual direct materials used 22,880 lbs. at $4.35 per lb. 6,575 hours for a total of Actual direct labor used $128,870 Actual units produced 36,000 Budgeted standards for each unit produced are 0.50 pounds of direct material at $4.30 per pound and 10 minutes of direct laborat $20.60 per hour AQ = Actual Quantity SQ = Standard Quantity AP - Actual Pnce SP = Standard Price AH = Actual Hours SH = Standard Hours AR = Actual Rate SR = Standard Rate (1) Compute the direct materials price and quantity variances (2) Compute the direct labor rate and efficiency variances Indicate whether each variance is favorable or unfavorable. Complete this question by entering your answers in the tabs below. Required Compute the direct materials price and quantity variances (Do not round Intermediate calculations.)

Answer 1

Compute direct material price and quantity Valiance quantity - Direct material Price Nayance 11 = ((Actual Quantity. x Standard price) - . ngh (Actreal Quantity & Actual Price = (22000 X 4.30) - (92000 X 4-35)] z $ 1100 Confavorable) direct material Quantity variance share = Standard Price (standard Quarcity - Actual ) Po duantity ů.35 (18000 - 22000) = $17400 ( Unfavorable) set. compute Direct Labour late and efficiency Valiance Direct Labour sate variance = Actual Howrs (Standard Rate - Actual ) P Rate v = 6575 (20.60 - 19.6). = $ 6575 C Favorable) Direct Labout efficiency variance - Standard Rate (Standard Howrs - Actual Hours) = 20.60 ( 6000 -65757 =$11845 (Unfarstable)

Notes l iity ! ! 1) Actual Quantity = $2,000 lbs Actual Price = $4.35 per lib. in hoc Standard Quantity = (Actual Quattity x Material I all used for each Quantity) ::!! = 36000. X 0.50 !! = 18,000165. • Standard Price = $4:30 Rei 16. 2) Actual Hours = 6,5 75 hours Actual Rate = $19.6 = (128 570/6575) Standard Howrst Units ix Standard time for each unit to --- 36000 Xbo the 60 list !!-6.000 hours