Question

Required information (The following information applies to the questions displayed below.] A manufactured product has the following information for June. Direct materials Direct labor Overhead Units manufactured Standard (6 lbs. @ $7 per lb.) (3 hrs. @ $16 per hr.) (3 hrs. @ $12 per hr.) Actual 43,800 lbs. @ $7.20 per lb. 21,300 hrs. @ $16.40 per hr. $264,300 7,200 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 Actual Cost Standard Cost S 0 S 0 | S 0

Answer 1

Answer:- Direct Material price variance= $8760 U.

Direct Material Quantity variance = $4200 U.

Explanation-

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

                                       = ($7.00 per lb. - $7.20 per lb.)43800 lbs.   

                                       = $8760 Unfavorable

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

                                              =(43200 lbs. – 43800 lbs.)*$7.00 per lbs.

                                             = $4200 Unfavorable

Where:-

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

                               =6 lbs. per unit *7200 units =43200 lbs

Answer:-Labor rate variance =$8520 U

Labor time variance = $5100 F

Explanation:-

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

= ($16.00 per hour - $16.40 per hour)* 21300 hours   

= $8520 Unfavorable

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

=(21600 hours – 21300 hours)*$17 per hour

= $5100 Favorable

Where:-

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

= 3 hours per unit *7200 units =21600 hours