Question

Hutto Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures. Direct materials (15 lbs. $4 per lb.) Direct labor ( hrs. $15 per hr.) Sosis 15.) 588 points During May the company incurred the following actual costs to produce 9,000 units. Direct materiale 18.000 lbs. ).75 per 1.) Direct labor 31.000 hrs. 515.10 per hr.). $517.500 468,100 AQ - Actual Quantity SQ - Standard Quantity AP Actual Price SP Standard Price AH - Actual Hours SH - Standard Hours AR - Actual Rate SR Standard Rate (1) Compute the direct materials price and quantity variances. (2) Compute the direct laborate variance and the direct labor efficiency variance Indicate whether each variance is favorable or unfavorable

Answer 1

Answer:- Direct Material price variance= $34500 F.

Direct Material Quantity variance = $12000 U.

Explanation-

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

                                       = ($4.00 per lb. - $3.75 per lb.)*138000 lbs.   

                                       = $34500 Favorable

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

                                              =(135000 lbs. – 138000 lbs.)*$4.00 per lbs.

                                             = $12000 Unfavorable

Where:-

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

                               =15 lbs. per unit *9000 units = 135000 lbs

Answer:-Labor rate variance =$3100 U.

Labor time variance = $60000 U.

Explanation:-

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

= ($15.00 per hour - $15.10 per hour)* 31000 hours   

= $3100 Unfavorable

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

=(27000 hours – 31000 hours)*$15 per hour

= $60000 Unfavorable

Where:-

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

= 3 hours per unit *9000 units =27000 hours