Question

Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below: Standard Standard Quantity or Hours 7.30 pounds 0.60 hours Standard Price or Rate $2.80 per pound $9.00 per hour Direct materials Direct labor $20.44 $ 5.40 During the most recent month, the following activity was recorded: a. 16,600.00 pounds of material were purchased at a cost of $2.50 per pound. b. All of the material purchased was used to produce 2,000 units of Zoom. C. 1,000 hours of direct labor time were recorded at a total labor cost of $12,000. Required: 1. Compute the materials price and quantity variances for the month. 2. Compute the labor rate and efficiency variances for the month. (For all requirements, Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Round your intermediate calculations to the nearest whole dollar.) 1. Materi Materials price variance Materials quantity variance Labor rate variance Labor efficiency variance

Answer 1

Calculation : - 1. material variance Price = Actual x Standard - Actual & Louantity Price Quantity Actual Price - (16600 x 2.8) - (166004 2.5 - 46480 - 41500 = $ 4980 F favorable Jarrance because actual price paid for actual alty is less than Std price allowed for actual cety. naterial Quantity = Actual & Std - Std x Std I Loty Price Loty Price Varranco ( 16600 x 2-®-((2000x7-30) X218) 46480 - 40880 $ 5600 U Jawance Std Price is unfavorable because stdaty at is less than actual aty at stod price Std aty = nits x Std atyper unit - 2000 X 7.3 14600

Dete 2. labor mate Variance = Actual y Actual - Sad rate hour deale y Actual hour = (12000 - 9x1000) 12000 - 9000 = $ 3000 U variance is unfavorable as Std rate allowed is less than actual cost incurred. It is given that actual Cost was 12000 ie actual leate y actual. Jaciance labor Efficiency= std x Actual Std x Stch o Leave hour late bour = (9x1000) - (9 x 1200) z 9000 - 10800 = 1800 F Variance is lavorable as actual hour used is less than std hours allowed. Sad hous = 2000 unit X o of hour per unit 1200 hour.