Question

Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below: Standard Quantity or Standard Price Standard Hours or Rate Cost Direct materials 7.80 pounds $2.30 per $ 17.94 pounds Direct labor 0.30 hours $8.00 per hour $ 2.40 During the most recent month, the following activity was recorded: a. 25,900 pounds of material were purchased at a cost of $2.10 per pound. b. All of the material purchased was used to produce 3.000 units of Zoom. c. 700 hours of direct labor time were recorded at a total labor cost of $6,300. Required: 1. Compute the materials price and quantity variances for the month. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Direct materials price variance Direct materials quantity variance

Answer 1

1.

Standard price = $2.30 per pound

Standard quantity = 7.80 pound per unit

Actual output = 3,000 units

Standard quantity for actual output = Standard quantity x Actual output

= 7.80 x 3,000

= 23,800 pounds

Actual quantity = 25,900 pounds

Actual price = $2.10 per pound

Direct materials price variance = Actual quantity x (Standard price - Actual price)

= 25,900 x (2.30-2.10)

= 25,900 x (0.20)

= $5,180 favorable

Direct materials quantity variance = Standard price x (Standard quantity- Actual quantity)

= 2.30 x (23,800-25,900)

= 2.30 x (-2,100)

= $4,830 unfavorable

Direct materials price variance	$5,180	F
Direct materials quantity variance	$4,830	U

2.

Standard rate = $8 per hour

Standard time = 0.30 hour per unit

Actual output = 3,000 units

Standard time for actual output = Standard time x Actual output

= 0.30 x 3,000

= 900 hours

Actual time = 700 hours

Actual cost = $6,300

Actual rate = Actual cost/ Actual time

= 6,300/700

= $9 per direct labor hour

Direct labor rate variance = Actual time x (Standard rate - Actual rate)

= 700 x (8-9)

= 700 x (-1)

= $700 unfavorable

Direct labor efficiency variance = Standard rate x (Standard time - Actual time)

= 8 x (900-700)

= 8 x 200

= $1,600 favorable

Direct labor rate variance	$700	U
Direct labor efficiency variance	$1,600	F

Kindly comment if you need further assistance. Thanks‼!