Question

HOW DO I CALCULATE?

Reed Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures. Direct materials (15 lbs. @ $4 per lb.) Direct labor (3 hrs. @ $15 per hr.) $60 45 During June the company incurred the following actual costs to produce 8,200 units. Direct materials (125,100 lbs. @ $3.75 per lb.) Direct labor (29,500 hrs. @ $15.15 per hr.). $469, 125 446,925 AH = Actual Hours SH = Standard Hours AR = Actual Rate SR = Standard Rate AQ = Actual Quantity SQ = Standard Quantity AP = Actual Price SP = Standard Price (1) Compute the direct materials price and quantity variances. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.) (2) Compute the direct labor rate variance and the direct labor efficiency variance. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.) Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the direct materials price and quantity variances. Indicate whether each variance is favorable or unfavorable. Actual Cost Standard Cost

Answer 1

Actual Cost Standard Cost AQ X АР AQ X SP SQ X SP 125100 125100 х 3.75 X 4.00 123000 X 4.00 469125 500400 492000 31275 8400 Direct Material Price Varaince Direct Material Quantity Varaince Total Direct Material Varaince 31275 Favorable Unfavorable 8400 22875 Favorable (15*8200) SQ 123000 Actual Cost Standard Cost АН х AR АН X SR SH х SR 29500 15.15 29500 15.00 24600 15.00 X X 446925 442500 369000 4425 73500 Direct Labor Rate Varaince Direct Labor Efficiency Variance Total Direct Labor Variance 4425 Unfavorable Unfavorable 73500 Unfavorable 77925 (8200*3) 24600 SH