Question

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Computation of Variable Cost Variances The following information pertains to the standard costs and actual activity for Tyler Company for September: Standard cost per unit Direct materials 4 units of material A $2.00 per unit 1 unit of material B x $3.00 per unit 3 hours x $8.00 per hour Direct labor Activity for September Materials purchased Material A Material B Materials used Material A 4,100 units x $2.05 per unit 1,000 units x $3.10 per unit Material B 3,750 units 905 units 2,690 hours $8.10 per hour 900 units Direct labor used Production output There were no beginning direct materials inventories. (a) Determine the materials price and quantity variances. Material A Materials price variance $ x U Materials quantity variance Oxu $ Material B 0x U OXU ✓ (b) Determine the labor rate and efficiency variances. Labor rate variance $ 0x U Labor efficiency variance OXF

Answer 1

Answer:- a)-Direct Material price variance Material A = $187.50 U.

Material B= $100 U.

Direct Material Quantity variance- Material A = $300 U.

Material B = $15 U.

Explanation-Material A-

1)-Material price variance = (Standard price – Actual price) * Actual quantity used

                                       = ($2 per unit - $2.05 per unit)*3750 units   

                                       = $187.50 Unfavorable

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

                                              =(3600 units – 3750 units)*$2 per unit

                                             = $300 Unfavorable

Where:-Material A-

Standard Quantity = No. of unit required*Actual output

                               = 4 units *900 units =3600 units

Explanation-Material B-

1)-Material price variance = (Standard price – Actual price) * Actual quantity used

                                       = ($3 per unit - $3.10 per unit)*1000 units   

                                       = $100 Unfavorable

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

                                              =(900 units – 905 units)*$3 per unit

                                             = $15 Unfavorable

Where:-Material A-

Standard Quantity = No. of unit required*Actual output

                               = 1 units *900 units =900 units

Answer:-b)-Labor rate variance =$269 U.

Labor time variance = $80 F.

Explanation:-

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

= ($8 per hour - $8.10 per hour)* 2690 hours   

= $269 Unfavorable

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

=(2700 hours – 2690 hours)*$8 per hour

= $80 Favorable

Where:-

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

= 3 hours per unit *900 units =2700 hours