Question

LUCIL Allen FIURI ES5 Your answer is partially correct. The following direct materials and direct labor data pertain to the operations of Laurel Company for the month of August. Costs Actual labor rate $13 per hour Actual materials price $130 per ton $12.50 per hour Standard labor rate Standard materials price $133 per ton Quantities Actual hours incurred and used 4,000 hours Actual quantity of materials purchased and used 1.900 tons Standard hours used 4,080 hours Standard quantity of materials used 1,880 tons (a) Compute the total, price, and quantity variances for materials and labor.

Answer 1

Total materials variance = Actual quantity of materials purchased and used * Actual materials price - Standard quantity of materials used * Standard materials price
Total materials variance = 1,900 * $130 - 1,880 * $133
Total materials variance = $3,040 Favorable

Materials price variance = Actual quantity of materials purchased and used * (Actual materials price - Standard materials price)
Materials price variance = 1,900 * ($130 - $133)
Materials price variance = $5,700 Favorable

Materials quantity variance = Standard materials price * (Actual quantity of materials purchased and used - Standard quantity of materials used)
Materials quantity variance = $133 * (1,900 - 1,880)
Materials quantity variance = $2,660 Unfavorable

Total labor variance = Actual hours incurred and used * Actual labor rate - Standard hours used * Standard labor rate
Total labor variance = 4,000 * $13.00 - 4,080 * $12.50
Total labor variance = $1,000 Unfavorable

Labor price variance = Actual hours incurred and used * (Actual labor rate - Standard labor rate)
Labor price variance = 4,000 * ($13.00 - $12.50)
Labor price variance = $2,000 Unfavorable

Labor quantity variance = Standard labor rate * (Actual hours incurred and used - Standard hours used)
Labor quantity variance = $12.50 * (4,000 - 4,080)
Labor quantity variance = $1,000 Favorable