Question

Direct Materials and Direct Labor Variances At the beginning of June, Kimber Toy Company budgeted 12,000 toy action figures to be manufactured in June at standard direct materials and direct labor costs as follows: Direct materials $25,200 Direct labor 10,080 Total $35,280 The standard materials price is $0.60 per pound. The standard direct labor rate is $12.00 per hour. At the end of June, the actual direct materials and direct labor costs were as follows: Actual direct materials $22,500 Actual direct labor 9,000 Total $31,500 There were no direct materials price or direct labor rate variances for June. In addition, assume no changes in the direct materials inventory balances in June. Kimber Toy Company actually produced 10,400 units during June. Determine the direct materials quantity and direct labor time variances. Round your per unit computations to two decimal places, if required. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Direct materials quantity variance Direct labor time variance

Answer 1

Direct Material quantity Variance = (SQ - AQ)SP

Standard qty = 25,200/0.6 = 42,000 so Standard qty = 42,000/12,000 x 10,400 = 36,400

Actual quantity = 22,500/0.6 = 37,500

Standard Price = 0.6

Direct Material quantity Variance = (36,400 - 37,500)0.6

=660 (Unfavorable)

Direct Labor time Variance = (SH - AH)SR

Standard Hours = 10,080/12 = 840 so Standard qty = 840/12,000 x 10,400 = 728

Actual quantity = 9,000/12 = 750

Standard Price = 12

Direct Material quantity Variance = (728 - 750)12

=264 (Unfavorable)