Question

During May, Joliet Fabrics Corporation manufactured 600 units of a special multilayer fabric with the trade name Stylex. The following information from the Stylex production department also pertains to May. Direct material purchased: 19,000 yards at $1.48 per yard Direct material used: 10,500 yards at $1.48 per yard Direct labor: 3,100 hours at $9.25 per hour $ 28,120 15,540 28,675 The standard prime costs for one unit of Stylex are as follows Direct material: 20 yards at $1.45 per yard Direct labor: 5 hours at $8.00 per hour Total standard prime cost per unit of output69.00 $29.00 40.00 Required Compute the following variances for the month of May. (Indicate the effect of each variance by selecting "Favorable" or "unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance). 1.Direct-material price variance 2. Direct-material quantity variance 3. Direct-material purchase price variance 4. Direct-labor rate variance 5. Direct-labor efficiency variance

Answer 1

Computation of Direct Material Price & Quantity Variance
Direct Material Purchase Price variance	(SP-AP)AQ Purchase	($1.45-$1.48)*19000	($570)	Unfavourable
Direc Material Quantity Variance	(SQ-AQ)SP	((20 *600)-10500)*$1.45	$2,175	Favourable
Direct Material Price variance	(SP-AP)AQ Used	($1.45-$1.48)*10500	($315)	Unfavourable
Computation of Direct Labour Rate & Efficiency Variance
Direct Labour Rate variance	(SR-AR)*AH	($8-$9.25)*3100	-3875	Un Favourable
Direct Labour Efficiency Variance	(SH-AH)SR	((5*600)-3100)*8)	-800	Un Favourable