Question

Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below: Standard Quantity or Hours 6.80 pounds 0.50 hours Standard Price or Rate $ 3.00 per pound $11.00 per hour Standard Cost $20.40 $ 5.50 Direct materials Direct labor During the most recent month, the following activity was recorded: a. Twenty two thousand nine hundred pounds of material were purchased at a cost of $2.70 per pound. b. All of the material purchased was used to produce 3,000 units of Zoom. c. 1,400 hours of direct labor time were recorded at a total labor cost of $18,200. Required: 1. Compute the materials price and quantity variances for the month. 2. Compute the labor rate and efficiency variances for the month. (For all requirements, Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Round your intermediate calculations to the nearest whole dollar.) Materials price variance Materials quantity variance Labor rate variance Labor efficiency variance

Answer 1

Particulars Direct Material SQ 20400 SP 3 AQ 22900 AP 2.7 Material Price Variance (MPV) = ( SP-AP) AQ >>MPV = 1 3 - 2.7 ) * 22900 >>MPV = 6870.00 Favorable Material Quantity Variance (MQV) = ( SQ - AQ) SP >>MQV = ( 20400 - 22900) * 3 >>MQV = -7500.00 Unfavorable Note-1 SQ = Standard Quantity for Actual output SP = Standard Price per Raw material AQ = Actual Quantiity consumed AP = Actual Price per Raw material

SH Particulars Direct Labour | SR 11 AHPAR 1 400 13 1500 Labour Rate Variance (LrV) = ( SR - AR ) AHP >>LRV = ( 11 - 13 ) * 1400 >>LRV = -2800 Unfavourable Labour Efficiency Variance ( LEV) = ( SH - AHW) SR >>LEV = ( 1500 - 1400 ) * 11 >>LEV = 1100 Favourable Note -1 SH = Standard Hours per Actual Output SR = Standard Rate per Hour AHP = Actual Hours Paid AR = Actual Rate per Hour.