Question

The following information pertains to the standard costs and actual activity for Repine company for September

Standard cost per unit Direct materials 4 units of material A x $ 6.00 per unit 1 unit of material B x $ 8.00 per unit 3 hours x $ 18.00 per hour 6,750 units x $ 6.20 per unit 1,650 units x $ 8.50 per unit Direct labor Activity for September Materials purchased Material A Material B Materials used Material A Material B Direct labor used Production output 6,225 units 1,508 units 4,425 hours x $18.80 per hour 1,500 units There were no beginning direct materials inventories. (a) Determine the materials price and quantity variances. Material A Materials price variance Materials quantity variance Material B (5) Determine the labor rate and efficiency variances Labor rate variance Labor efficiency variance $

Answer 1

Material Price Variance= (Actual Price – Standard Price ) X Materials purchased

Material Price Variance of A = (6.2-6) X 6750 = 1350 Unfavorable

Material Price Variance of B = (8.5-8) X 1650 = 825 Unfavorable

Material quantity Variance= (Actual quantity– Standard quantity ) X Standard Price

Standard quantity = Production output X 4 units = 1500 X 4 units= 6000

Material quantity Variance of A= (6225 -6000) X 6 = 1350 Unfavorable

Standard quantity = Production output X 1 units = 1500 X 1= 1500

Material quantity Variance of A= (1508 -1500) X 8 = 64 Unfavorable

Labor rate variance= (Actual rate – standard rate) X actual Hours

Labor rate variance=(18.8-18) X 4425 = 3540 Unfavorable

Labor efficiency variance= Standard Rate ( actual hours - standards hours )

Standard hours = production output X 3 Hours = 1500 X 3 = 4500

Labor efficiency variance= 18 (4425 – 4500)= 1350 favorable