Question

Exercise 11-9 Pukalani 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 x $11.40) Direct labor (1.20 hours x $13.80) $10.26 $16.56 During May, the company produced 3,340 band hats; 3,870 yards of material were purchased for $41,022, and 3,050 yards of material were used in production. Also during May, 4,240 direct labor hours were worked at a cost of $59,360. 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 Material Quantity Variance Unfavorable Favorable Neither Unfavorable nor Favorable सी Labor Rate Variance सी Labor Efficiency Variance I a

Answer 1

Material price variance = (Actual price - Standard price)* Actual qunatity purchased Material price variance = [($41,022/3,870) - $11.40] *3,870 Material price variance = ($10.6 - $11.40)*3,870 Material price variance = $3,096 Favorable Material quantity variance = (Actual quantity used - Standard qunatity)*Standard price Material quantity variance = [3,050 - (3,340*0.90)]*$11.40 Material quantity variance = (3,050 - 3,006) *$11.40 Material quantity variance = $502 Unfavorable Labor rate variance = (Actual rate - Standard rate) *Actual hours Labor rate variance = [($59,360/4,240) - $13.80)*4,240 Labor rate variance = ($14 - $13.80)*4,240 Labor rate variance = $848 Unfavorable Labor Efficiency variance = (Actual hours - Standard hours)*Standard rate Labor Efficiency variance = [4,240 - (3,340*1.20)]*$13.80 Labor Efficiency variance = (4,240 - 4,008) *$13.80 Labor Efficiency variance = 3,202 Unfavorable