Question

Exercise 23-8 Your answer is partially correct. Try again. The following direct materials and direct labor data pertain to the operations of Laurel Company for the month of August. Costs Actual labor rate Actual materials price Standard labor rate Standard materials price $13 per hour $220 per ton $12.50 per hour $224 per ton Quantities Actual hours incurred and used Actual quantity of materials purchased and used Standard hours used Standard quantity of materials used 4,200 hours 1,600 tons 4,280 hours 1,580 tons

Answer 1

Total Material Variance	$1,920.00	favorable
Material Price Variance	$6,400.00	favorable
Material Quantity Variance	$4,480.00	unfavorable
Workings:
Material Price Variance =	(Standard Price - Actual Price) * Actual Quantity
=	[$224 - $220] * 1,600 tons
=	$6,400.00	favorable
Material Quantity Variance =	(Standard Quantity - Actual Quantity ) * Standard Rate
=	[(1,580 - 1,600] * $224
=	$4,480.00	unfavorable
Total Labor Variance	$1,100.00	unfavorable
Labor Price Variance	$2,100.00	unfavorable
Labor Quantity Variance	$1,000.00	favorable
Workings:
Direct labor rate variance =	(Standard Rate - Actual Rate) * Actual hours
=	[$12.50 per hr. - $13.00 per hr.] * 4,200 DLHs
=	$2,100.00	unfavorable
Direct labor efficiency variance =	(Standard hours - Actual hours) * Standard Rate
=	[4,280 - 4,200] * $12.50
=	1000.00	favorable