Question

Material and Labor Variances
The following actual and standard cost data for direct material and direct labor relate to the production of 2,000 units of a product:

		Actual Costs				Standard Costs
Direct material		7,800	lbs. @	$5.30		8,000	lbs. @	$5.10
Direct labor		12,400	hrs. @	$8.40		12,000	hrs. @	$8.70

Determine the following variances:

Do not use negative signs with any of your answers. Next to each variance answer, select either "F" for Favorable or "U" for Unfavorable.

Materials Variances
Actual cost:
Split cost:
Standard cost:
a. Materials price		FU
b. Materials efficiency		FU

Labor Variances
Actual cost:
Split cost:
Standard cost:
c. Labor rate		FU
d. Labor efficieny		FU

Answer 1

2000 Material a labour variances. Stelo Material required for lunit of product 8000 41602 Ste prices = $5.10 Stel cost for lunit of product = 4 x 5010 = $20.40 Act Material required used for lunit of product = 78000 2000 : 3.9.165 Actual cost = 3.9x5.30 = $20.67 Material price variance = stel. Actual oy x Stel Price - - Actual cost = (3.9 x 5:10) – 20.67 - 19:89 – 20167 - = 0.780) std. Actual Material effeciency variance (Aload gry - sta gry) x side cost 5:10 - 015! (F) Labour variance Labour Rate Labour Efficiency . Shehyunit = 12000 -6 m. lieppiciency - stal hy x Slal rate Actual hr/unit: 12400 = 6 2hr. - Achial bXx Stal rate 2000 Is 6x8.70)-(6-2x8.70) te variance Actual hy x Sid rate - actual hrx Actual = 52.2 - yote - 6-2 x 8.70) - 16.2 x 8.40) = 1,74 rul - 53.94 - 22.08 = 1:32(F) 2000- 2000