Question

Orville Company's standard and actual costs per unit are provided below for the most recent period. During this time period 625 units were actually produced. Standard Actual Materials Standard: 23 metres a $2..perm 552 Actual: 2.1 metres a $2.00 55.45 Direct labour Sundard: 14 hrs $8.10 h 114 Actual: 17 les 58.5 perhe Variable overhead Standard: 1451.50 per hr 6.2 Actual: 1.7.54.20 per hr Total unit.com $22.88 $27,05 For simplicity, assume there was no inventory of materials at the beginning or end of the period. Required: Given the information above, compute the following variances. Also indicate if the variances are favorable or unfavorable s. Materials price variance (2 marks) 6. Materials quantity variance (2 marks) (2 7. Direct labour rate variance marks)

Answer 1

Answer - 5

Material Price Variance = (Actual price - Standard price) x Actual quantity used

Actual Price = $2.60

Standard Price = $2.40

Actual quantity used = Quantity Produced x Actual Material used per unit

Actual quantity used = 625 units x 2.1 meter

Actual quantity used = 1312.50 meter

Material Price Variance = ($2.60 - $2.40) x 1312.50

Material Price Variance = $262.50 (U)

Answer - 6

Material Quantity Variance = (Actual quantity used - Standard quantity used) x Standard Price

Standard quantity used = Quantity Produced x Standard Material used per unit

Standard quantity used = 625 units x 2.3 meter

Standard quantity used = 1437.50 meter

Material Quantity Variance = (1312.50 - 1437.50) x $2.40

Material Quantity Variance = $300.00 (F)

Answer -7

Direct Labour Rate Variance = (Actual rate - Standard rate) x Actual hours

Actual rate = $8.50 per hour

Standard rate = $8.10 per hour

Actual hours = Quantity Produced x Actual hrs per unit

Actual hours = 625 x 1.7 hrs

Actual hours = 1062.50 hrs

Direct Labour Rate Variance = ( $8.50 - $8.10 ) x 1062.50

Direct Labour Rate Variance = $425 (U)