Question

ter 10 Homework Help Exercise 10-7 Direct Materials Variances [LO10-1 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 S.20 pounds $3.08 per pound $35.6 0.40 hours ธ5.00 per hour 2.00 During the most recent month, the following activity was recorded b. The company produced only 1000 units, using 8.000 pounds of maberial (The rest of the material purchased remained in raw c. 500 hours of direct labor time were recorded at a total labor cost of $6,000 Pa Ten thousand pounds of material were purchased at a cost of $2.90 per pound Required: Compute the materials price and quantity variances for the month Ondicate the effect of each variance by selecting "F* for avorable, "U" for unfavorable, and "None for no effect (0.e, zero variance), Input all amounts as positive values. Do not round intermediate calculations) MacBook Air

Answer 1

1)

Actual price = $2.90 per pound

Standard price = $3 per pound

Actual quantity = 10,000 pounds

Material price variance = (Standard price - Actual price) X Actual quantity

= ( $3 - $2.90) X 10,000

= 1,000 F (Favourable)

2)

Actual quantity used = 8000 pounds

Standard quantity to be used = (1000 units X 5.20 pounds) = 5,200 pounds

Standard price = $3

Material quantity variance = (Actual quantity used - Standard quantity to be used) X standard price

= (8,000 - 5,200) X $3

= 8,400 U (Unfavourable)

Material price variance	1,000	F
Material quantity variance	8,400	U