Question

Lawn Band Uniforms uses a standard costing system. The standard material and labor costs for producing a marching band hat are as follows:

Materials (0.90 yards × $12.20)		$10.98
Direct labor (1.20 hours × $13.70)		$16.44

During May, the company produced 3,290 band hats; 4,340 yards of material were purchased for $44,702, and 3,300 yards of material were used in production. Also during May, 4,710 direct labor hours were worked at a cost of $61,230. Calculate material price and quantity variances and labor rate and efficiency variances. Indicate whether the variances are favorable or unfavorable. (Round intermediate calculations to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 125. Enter all variances as a positive number.)

Material Price Variance		$		UnfavorableFavorableNeither Unfavorable nor Favorable
Material Quantity Variance		$		FavorableUnfavorableNeither Unfavorable nor Favorable
Labor Rate Variance		$		Neither Unfavorable nor FavorableUnfavorableFavorable
Labor Efficiency Variance		$		Neither Unfavorable nor FavorableFavorableUnfavorable

Answer 1

Answer:- Direct Material price variance= $8246 F.

Direct Material Quantity variance = $4136 U

Explanation-

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

= {$12.20 per yard – ($44702/4340 yards)}*4340 yards

= $8246 Favorable

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

                                              =(2961 yards – 3300 yards)*$12.20 per yard

                                             = $4136 Unfavorable

Where:-

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

= 0.90 yards per unit *3290 units

= 2961 yards

Answer- Direct Labor rate variance = $3297 F.

Direct Labor Efficiency variance = $10439 U.

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

= {$13.70 per hour – ($61230/4710)}* 4710 hours   

= $3297 Favorable

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

=(3948 hours – 4710 hours)*$13.70 per hour

= $10439 Unfavorable

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

                               = 1.20 hours per unit *3290 units =3948 hours