Question

Required information [The following information applies to the questions displayed below] A manufactured product has the following information for June. Standard Actual Direct materials Direct labor Overhead (6 lbs. $7 per 1b.) (2 hrs. $17 per hr.) (2 hrs. $11 per hr.) 48,000 lbs.e $7.20 per 1b. 15,5ee hrs.@ $17.50 per hr. $179,4e0 7,900 Units manufactured Compute the direct materials price variance and the direct materials quantity variance. Indicate whether each variance is favorable or unfavorable. AQ= Actual Quantity SQ- Standard Quantity AP Actual Price SP Standard Price Standard Cost Actual Cost of 6 Next> 2 3 < Prey hp a N

Answer 1

Answer-

Answer- Material price variance = $9600 U

Material Quantity variance = $4200 U

Explanation-

Material price variance = (Standard price – Actual price) * Actual quantity purchased

                                       = ($7.00 per lb -$7.20 per lb. )*48000 lbs.  

                                       = $9600 Unfavorable

Material Quantity variance = (Standard Quantity- Actual Quantity)*Standard price

                                              =(47400 lbs. – 48000 lbs.)* $7.00 per lbs.

                                             = $4200 Unfavorable

Where:-

Standard Quantity = No. of pound per unit*Actual output

                               =6 lb. per unit *7900 units =47400 lbs.

Answer- Direct Labor rate variance = $ 7750 U

Direct Labor Efficiency variance = $5100 F

Explanation-

Direct Labor rate variance = (Standard rate – Actual rate) * Actual hours

                                       = ($17.00 per hour – $17.50 per hour)* 15500 hours   

                                       = $7750 Unfavorable

Direct Labor Efficiency variance=(Standard hours-Actual hours)*Standard rate per hour

                                       =(15800 hours – 15500 hours)*$17.00 per hour

                                          = $5100 Favorable

Where:-

Standard Hours = No. of hours per unit*Actual output

                               = 2 hour per unit*7900 units= 15800 hours