Question

Required Information [The following information applies to the questions displayed below.) A manufactured product has the following information for June. Direct materials Direct labor Overhead Units manufactured Standard Actual 6 lbs. @ $7 per lb. 54,400 en lbs. @ $7.20 per *° lb. 3 hrs. @ $16 per hr. 26,800 6 seg hrs. @ $16.50 per 3 hrs. @ $11 per hr. $303,900 9,000 Compute the direct materials price variance and the direct materials quantity variance. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance. Round "Cost per unit" answers to 2 decimal places.) AQ = Actual Quantity SQ = Standard Quantity AP = Actual Price SP = Standard Price Actual Cost до 1 x 54,400 x | $ 391,680 AP $ 7.20 AQT 54,400 X x $ 380,800 SP 7.00 Standard Cost SQL x X SP 7.00 $ $ $ 10.880 Direct materials price variance Direct materials quantity variance Total direct materials variance $ 10,880 Unfavorable Unfavorable Unfavorable

Answer 1

Solution 1:

Direct Material Cost Variance
Actual Cost				Standard cost for actual quantity				Standard Cost
AQ	*	AP		AQ	*	SP		SQ	*	SP
54400	*	$7.20		54400	*	$7.00		54000	*	$7.00
	$3,91,680.00				$3,80,800.00				$3,78,000.00
			$10,880.00				$2,800.00
Direct Material Price Variance				$10,880.00	Unfavorable
Direct Material Qty variance				$2,800.00	Unfavorable
Total Direct material Cost variance				13,680.00	Unfavorable

Note: Standard quantity = 9000 units * 6 = 54,000

Solution 2:

Direct Labor Cost Variance
Actual Cost				Standard cost for actual quantity				Standard Cost
AH	*	AR		AH	*	SR		SH	*	SR
26800	*	$16.50		26800	*	$16.00		27000	*	$16.00
	$4,42,200.00				$4,28,800.00				$4,32,000.00
			$13,400.00				$3,200.00
Direct Labor rate Variance				$13,400.00	Unfavorable
Direct Labor Efficiency variance				$3,200.00	Favorable
Total Direct Labor Cost variance				10,200.00	Unfavorable

Note: SH = 9000 units * 3 hours per units =27000 hours