Question

Page Break Question 1: Triple Star Company's standard and actual costs per unit are provided below for the most recent period During this period, 500 units were actually produced. Product Standard Cost Product Actual Cost Metres $8.00 4. 4.1 $7.79 Unit Price Per Metre $2.00 $1.90 Hourly Rate $7.00 $6.50 Hours Materials Standard Actual Direct labour Standard Actual Variable overhead Standard Actual Total unit cost $21.00 3 3.2 $20.80 Hours Hourly Rate $6.00 2 19.2 $3.00 $3.10 $6.82 S35.41 $35.00 Required: Given the information above, compute the following variances. Also indicate if the variances are favorable or unfavorable. 1. Materials price variance = 2. Materials quantity variance= 3. Direct labour rate variance=

Answer 1

Material Price variance = (Standard price - Actual Price) x Actual Quantity

= (2.00 - 1.90) x 4.1 x 500

= 0.1 x 2050

= 205

Material quantity variance = (Standard Quantity - Actual Quantity) x Standard price

= (4 - 4.1) x500 x 2.00

= -0.1  x 500 x 2.00

= -100

Direct labour rate variance = (Standard Rate - Actual Rate) x Actual hour

= ($7.00 - $6.50) x 3.2

= $0.5 x 3.2

= 1.6