E9-13 Determining Actual Costs, Standard Costs, and Variances [LO 9-3, 9-4] Amber Company produces iron table...

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E9-13 Determining Actual Costs, Standard Costs, and Variances [LO 9-3, 9-4] Amber Company produces iron table and chair sets.

3. Calculate the direct materials quantity variance based on quantity used. (Indicate the effect of each variance by selectin

business accounting

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Answer 1

Answer #1

(1)

total cost of purchases = actual quantity purchased x actual purchase price

= 1105000 x $2.20

= $2431000

(2)

Material price variance = actual quantity purchased x (standard price - actual price)

= 1105000 x ($2 - $2.20)

= $221000 Unfavorable

(3)

Material quantity variance = standard price x (standard quantity - actual quantity used)

= $2 x (960000 - 990000)

= $60000 Unfavorable

(4)

Labor rate variance = actual hours x (standard rate - actual rate)

$5400 = 9000 x (standard rate - $7.40)

standard rate = ($5400/9000) + $7.40 = $8

(5)

Labor efficiency variance = standard rate x (standard hours - actual hours)

= $8 x (10000 - 9000)

= $8000 Favorable

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Answer 2

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