Question

Exercise 21-11 Direct materials and direct labor variances LO P2 Hutto Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures. Direct materials (16 lbs. @ $4 per lb.) $64 Direct labor (3 hrs. $15 per hr.) 45 During May the company incurred the following actual costs to produce 8,900 units. Direct materials (146,200 1bs. $3.8e per $555,560 lb.) Direct labor (30,7ee hrs. @$15.10 per hr.) 463,570 AQ = Actual Quantity SQ = Standard Quantity AP Actual Price SP Standard Price AH Actual Hours SH Standard Hours AR Actual Rate SR= Standard Rate

Answer 1

Answer:- Direct Material price variance= $29240 F.

Direct Material Quantity variance = $15200 U.

Explanation-

1)-Material price variance = (Standard price – Actual price) * Actual quantity used

                                       = ($4.00 per lb. - $3.80 per lb.)*146200 lbs.   

                                       = $29240 Favorable

2)-Material Quantity variance = (Standard Quantity- Actual Quantity)*Standard price

                                              =(142400 lbs. – 146200 lbs.)*$4.00 per lbs.

                                             = $15200 Unfavorable

Where:-

Standard Quantity = No. of lb. per unit*Actual output

                               = 16 lbs. per unit *8900 units = 142400 lbs

Answer:2) -Labor rate variance =$3070 U.

Labor time variance = $60000 U.

Explanation:-

Direct Labor rate variance = (Standard rate – Actual rate) * Actual hours

= ($15.00 per hour - $15.10 per hour)* 30700 hours   

= $3070 Unfavorable

Direct Labor Time variance=(Standard hours-Actual hours)*Standard rate per hour

=(26700 hours – 30700 hours)*$15 per hour

= $60000 Unfavorable

Where:-

Standard Hours = No. of hours per unit*Actual output

= 3 hours per unit *8900 units =26700 hours