Question

Ch 08 Ex 8-15 1 Exercise 08-15 Direct materials and direct labor variances LO P3 The following describes production activities of Mercer Manufacturing for the year. 15 polnts 28,000 lbs. at $4.90 per lb. 8,650 hours for a total of $174,730 51,600 Actual direct materials used Actual direct labor used Actual units produced еВook Budgeted standards for each unit produced are 0.50 pound of direct material at $4.85 per pound and 10 minutes of direct labor at $21.20 per hour Hint AH Actual Hours SH Standard Hours AR Actual Rate Ask SR Standard Rate AQ = Actual Quantity SQ Standard Quantity AP Actual Price Print SP = Standard Price References (1) Compute the direct materials price and quantity variances and classify each as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance. Round "Cost per unit" answers to 2 decimal places.) (2) Compute the direct labor rate and efficiency variances and classify each as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.) Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the direct materials price and quantity variances and classify each as favorable or unfavorable. (Do not round intermediate calculations.) Actual Cost Standard Cost <Required 1 Required 2

Answer 1

1
Actual Cost								Standard Cost
AQ	x	AP		AQ	x	SP		SQ	x	SP
28,000	x	4.90		28,000	x	$4.85		25,800	x	$4.85
	137200				135800				125130
			1400				10670
Direct materials price variance				1400	Unfavorable
Direct materials quantity variance				10670	Unfavorable
Total direct materials variance				12070	Unfavorable
2
Actual Cost								Standard Cost
AH	x	AR		AH	x	SR		SH	x	SR
8,650	x	$20.20		8,650	x	$21.20		8,600	x	$21.20
	174730				183380				182320
			8650				1060
Direct labor rate variance				8650	Favorable
Direct labor efficiency variance				1060	Unfavorable
Total direct labor variance				7590	Favorable