Question

H55 Band Uniforms uses a standard costing system. The standard material and labor costs for producing a marching band hat are as follows:

Materials (0.90 yards × $11.30)		$10.17
Direct labor (1.20 hours × $13.90)		$16.68

During May, the company produced 3,900 band hats; 4,090 yards of material were purchased for $46,217, and 3,170 yards of material were used in production. Also during May, 4,610 direct labor hours were worked at a cost of $59,930. Calculate material price and quantity variances and labor rate and efficiency variances. Indicate whether the variances are favorable or unfavorable. (Round intermediate calculations to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 125. Enter all variances as a positive number.)

Answer 1

Actual materials purchased = 4,090 yards
Actual materials used = 3,170 yards
Actual materials cost = $46,217
Number of units produced = 3,900
Standard materials per unit = 0.90 yards
Standard price per yard = $11.30

Standard materials required = Number of units produced * Standard materials per unit
Standard materials required = 3,900 * 0.90
Standard materials required = 3,510 yards

Materials Price Variance = Actual materials cost - Actual materials purchased * Standard price per yard
Materials Price Variance = $46,217 - 4,090 * $11.30
Materials Price Variance = $0

Materials Quantity Variance = Standard price per yard * (Actual materials used - Standard materials required)
Materials Quantity Variance = $11.30 * (3,170 - 3,510)
Materials Quantity Variance = $3,842 Favorable

Actual hours used = 4,610
Actual labor cost = $59,930
Number of units produced = 3,900
Standard hours per unit = 1.20
Standard rate per hour = $13.90

Standard hours allowed = Number of units produced * Standard hours per unit
Standard hours allowed = 3,900 * 1.20
Standard hours allowed = 4,680

Labor Rate Variance = Actual labor cost - Actual hours used * Standard rate per hour
Labor Rate Variance = $59,930 - 4,610 * $13.90
Labor Rate Variance = $4,149 Favorable

Labor Efficiency Variance = Standard rate per hour * (Actual hours used - Standard hours allowed)
Labor Efficiency Variance = $13.90 * (4,610 - 4,680)
Labor Efficiency Variance = $973 Favorable