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 Quantity or Hours 4.6 pounds 8.2 hours Direct materials Direct labor Standard Price or Rate $ 2.50 per pound $18.00 per hour Standard Cost $11.50 $ 3.60 During the most recent month, the following activity was recorded a. Twenty thousand pounds of material were purchased at a cost of $235 per pound. b. The company produced only 3,000 units, using 14.750 pounds of material (The rest of the material purchasbd remained in raw materials inventory.) c. 750 hours of direct labor time were recorded at a total labor cost of $14.925 Required: Compute the materiais 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 effectie., zero variance). Input all amounts as positive values.) Materials pnce variance Materials quantity variance

Answer 1

Ans. A 1	Materials price variance = (Standard price - Actual price) * Actual quantity
	($2.50 - $2.35) * 20,000
	$0.15 * 20,000
	$3,000	favorable
Ans. A 2	Materials quantity variance = (Standard quantity - actual quantity) * Standard price
	(13,800 - 20,000) * $2.50
	-6,200* $2.50
	-$15,500	or   $15,500 unfavorable
	*Standard quantity = Actual output * Standard quantity per unit of output
	3,000 * 4.6 pounds
	13,800 pounds