Question

What's the material quantity variance?

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 6.00 pounds 0.40 hours Standard Price or Rate $3.00 per pound $9.00 per hour Standard Cost $18.00 $ 3.60 Direct materials Direct labor During the most recent month, the following activity was recorded: a. Eleven thousand six hundred pounds of material were purchased at a cost of $2.90 per pound. b. The company produced only 1,160 units, using 10,440 pounds of material. (The rest of the material purchased remained in raw materials inventory.) c. 564 hours of direct labor time were recorded at a total labor cost of $6,768. Required: Compute the terials price and quantity variances for the mo (Indicate ariance by selecting "F" favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.) Answer is complete but not entirely correct. Materials price variance Materials quantity variance $ 1,160 F $ 13,920x|U

Answer 1

Solution:

Material price variance	$1,160	F
Material quantity variance	$10,440	U

Explanation:

Material price variance = AQ (AP - SP) = 11600(2.90-3) = 1,160 F

Material quantity variance = SP(AQ - SQ) = 3 (10440-6960*) = 10440 U

*1160 X 6 = 6960