Question

Chapter 9 Question 5:

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 Hours		Standard Price or Rate			Standard Cost
Direct materials	5.80	pounds	$	3.00	per pound	$	17.40
Direct labor	0.40	hours	$	8.00	per hour	$	3.20

During the most recent month, the following activity was recorded:

1. Eleven thousand two hundred pounds of material were purchased at a cost of $2.90 per pound.

2. The company produced only 1,120 units, using 10,080 pounds of material. (The rest of the material purchased remained in raw materials inventory.)

3. 548 hours of direct labor time were recorded at a total labor cost of $6,576.

Required:

Compute the materials price and quantity variances for the month.

Answer 1

Material Price variance = AQ (AP-SP) Actual Quantity (AQ) 11200 Pounds Actual price (AP) 2.90 per pound Standard Price (SP) 3.00 per pound Material Price variance 1120 Favourable Material Quantity variance = SP (AQ - SQ) Standard Price (SP) 3.00 per pound Actual Quantity (AQ) 10080 Pounds Standard Quantity (SQ) 6496 Pounds Material Quantity variance 10752 Un Favourable