Question

Suds & Cuts is a local pet grooming shop owned by Collin Bark. Collin has prepared the folowing standard cost card for each dog bath given: Standard Quantity 14 oz $0.40 per oz 12 gal. $0.04 per gal 0.9 hr $9.00 per hr Standard Unit Cost $0.56 Standard Rate Shampoo Water Direct labor 048 8.10 During the month of July, Collin's employees gave 320 baths. The actual results were 710 ounces of shampoo used (cost of $340.80), 6,200 gallons of water used (cost of $434), and labor costs for 260 hours (cost of $2,756) Required: 1. Caloulate Suds& Cuts direct materials variances for both shampoo and water for the month of July. (Round your answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U for unfavorable.) Shampoo Water Direct Material Price Variance Direct Material Quantity Variance

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Answer 1

Answer to Question 1:

Requirement 1:

Shampoo:

Standard quantity allowed = Actual number of baths * Standard quantity per bath
Standard quantity allowed = 320 * 1.40
Standard quantity allowed = 448 ounces

Direct material price variance = Actual materials cost - Actual quantity used * Standard price per ounce
Direct material price variance = $340.80 - 710 * $0.40
Direct material price variance = $56.80 Unfavorable

Direct material quantity variance = Standard price per ounce * (Actual quantity used - Standard quantity allowed)
Direct material quantity variance = $0.40 * (710 - 448)
Direct material quantity variance = $104.80 Unfavorable

Water:

Standard quantity allowed = Actual number of baths * Standard quantity per bath
Standard quantity allowed = 320 * 12
Standard quantity allowed = 3,840 gallons

Direct material price variance = Actual materials cost - Actual quantity used * Standard price per ounce
Direct material price variance = $434 - 6,200 * $0.04
Direct material price variance = $186 Unfavorable

Direct material quantity variance = Standard price per ounce * (Actual quantity used - Standard quantity allowed)
Direct material quantity variance = $0.04 * (6,200 - 3,840)
Direct material quantity variance = $94.40 Unfavorable

Requirement 2:

Standard labor hours allowed = Actual number of baths * Standard labor hours per bath
Standard labor hours allowed = 320 * 0.90
Standard labor hours allowed = 288 hours

Direct labor rate variance = Actual direct labor cost - Actual labor hours * Standard labor rate per hour
Direct labor rate variance = $2,756 - 260 * $9.00
Direct labor rate variance = $416 Unfavorable

Direct labor efficiency variance = Standard labor rate per hour * (Actual labor hours - Standard labor hours allowed)
Direct labor efficiency variance = $9.00 * (260 - 288)
Direct labor efficiency variance = $252 Favorable