Question

Mail-Patricia Feza Mu anewconnect.mheducation.com Chapter 10 Homework.. Suffolk University in B. Chapter 10 Homework Set Search and Select to P Quiz Two Prep-19FA Ssed Off thece Saved 5 Help Save& E Ch 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: 2 points Standard Quantity or Bours 7.40 pounds $2.30 per pound 0.90 hours Standard Price Standard Cost $17.02 7.65 Direct materials Direct labor or Rate $8.50 per hour евоok During the most recent month, the following activity was recorded: References a. 21,500.00 pounds of material were purchased at a cost of $2.10 per pound. b. All of the material purchased was used to produce 2,500 units of Zoom c. 2,000 hours of direct labor time were recorded at a total labor cost of $21,000. 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) 4,300 F $ Materials price variance 1. U Materials quantity variance Labor rate variance 2. F Labor efficiency variance LO

Answer 1

Requirement 1:

Actual output = 2,500 units

Standard material allowed = Actual output * Standard material required per unit
Standard material allowed = 2,500 * 7.40
Standard material allowed = 18,500 pounds

Materials price variance = Actual material used * (Actual price per pound - Standard price per pound)
Materials price variance = 21,500 * ($2.10 - $2.30)
Materials price variance = $4,300 Favorable

Materials quantity variance = Standard price per pound * (Actual material used - Standard material allowed)
Materials quantity variance = $2.30 * (21,500 - 18,500)
Materials quantity variance = $6,900 Unfavorable

Requirement 2:

Actual output = 2,500 units

Standard labor hours allowed = Actual output * Standard labor hours required per unit
Standard labor hours allowed = 2,500 * 0.90
Standard labor hours allowed = 2,250

Labor rate variance = Actual labor cost - Actual labor hours worked * Standard rate per hour
Labor rate variance = $21,000 - 2,000 * $8.50
Labor rate variance = $4,000 Unfavorable

Labor efficiency variance = Standard rate per hour * (Actual labor hours worked - Standard labor hours allowed)
Labor efficiency variance = $8.50 * (2,000 - 2,250)
Labor efficiency variance = $2,125 Favorable