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Item 6

Item 6 1.42 points

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 Quantity or Hours		Standard Price or Rate			Standard Cost
Direct materials	6.40	pounds	$	3.00	per pound	$	19.20
Direct labor	0.40	hours	$	11.00	per hour	$	4.40

During the most recent month, the following activity was recorded:

1. Twelve thousand four hundred pounds of material were purchased at a cost of $2.90 per pound.

2. The company produced only 1,240 units, using 11,160 pounds of material. (The rest of the material purchased remained in raw materials inventory.)

3. 596 hours of direct labor time were recorded at a total labor cost of $7,152.

Required:

Compute the materials price and quantity variances for the month. (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. Do not round intermediate calculations.)

Answer 1

1) Direct Material Price Variance Direct Material Quantity Variance $1.240 F $9,672U Workings: Direct Material Price Variance = (Standard Price - Actual Price) * Actual Quantity = ($3.00 per pound - $2.90 per pound) * 12.400 pound $1,240 favorable Direct Material Quantity Variance = (Standard Quantity - Actual Quantity) * Standard Rate = [(1.240 units * 6.40 pounds) - 11,160 pounds] * $3.00 per pound = (7.936 - 11.160) * $3.00 $9,672 Unfavorable