Question

Sunland Construction Consultants performs cement core tests in its Greenville laboratory. The following standard costs for the tests have been developed by the company’s controller, Landon Sunland, based on performing 2,100 core tests per month.

		Standard Price		Standard Quantity			Standard Cost
Direct materials		$0.50 per pound		4 pounds			$2.00
Direct labor		$11 per DLH		0.50 DLH			5.50
Variable overhead		$9 per DLH		0.50 DLH			4.50
Fixed overhead		$16 per DLH		1 DLH			16.00
Total standard cost per test							$28.00

At the end of March, London reported the following operational results:
●		The company actually performed 2,300 core tests during the month.
●		8,600 pounds of direct materials were purchased during the month at a total cost of $5,800.
●		6,300 pounds of direct materials were used to conduct the core tests.
●		860 direct labor hours were worked at a total cost of $9,830.
●		Actual variable overhead was $8,000.
●		Actual fixed overhead was $15,900.

(b) Calculate the direct materials quantity variance for March. (Round answer to 0 decimal places, e.g. 5,275. If variance is zero, select "Not Applicable" and enter 0 for the amounts.)

(c) Calculate the direct labor rate variance for March. (Round per unit value to 2 decimal places, e.g. 52.75 and final answer to 0 decimal places, e.g. 5,275. If variance is zero, select "Not Applicable" and enter 0 for the amounts.)

Answer 1

Material Quantity Variance (MQV) = ( SQ-AQ) SP >>MQV = 1 9200 - 6300 ) * 0.5 >>MQV - 1450,00 Favorable Note-1 SQ = Standard Quantity for Actual output (2300 * 4 = 9200) SP = Standard Price per Raw material AQ = Actual Quantiity consumed AP = Actual Price per Raw material

Particulars Direct Labour SH 1150 SR 11 AHP 860 AR 11.43 Labour Rate Variance (LV) = ( SR - ARAHP >>LRV = ( 11 - 11.43) * 860 >>LRV = -370 Unfavourable