Question

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Required information The following information applies to the questions displayed below] A manufactured product has the following information for June. standard (6 lbs.@$8 per lb.) (3 hrs. $17 per hr.) (3 hrs. $11 per hr.) Actual Direct materials 49,100 lbs. $8.10 per lb. 23,900 hrs. $17.50 per hr. $273,400 8,100 Direct labor Overhead Units manufactured Compute the direct labor rate variance and the direct labor efficiency variance. Indicate whether eac unfavorable. AH Actual Hours SH = Standard Hours AR Actual Rate SR Standard Rate

Answer 1

1.

Actual Cost Standard Cost

AH		AR		AH		SR		SH		SR
$23,900		$ 17.50		$ 23,900		$ 17		$24,300		$17
	$418,250				$406,300				$413,100
			$11,950				$6,800

Direct Labour Rate Variance	$11950 U
Direct Efficiency Variance	$ 6,800 F
Total Direct Labour Variance	$ 5,150 U

2.

Actual Cost Standard Cost

AQ		AD		AQ		SP		SQ		SP
$ 32,000		$10.40		$32,000		$ 10.30		$36,000		$10.30
	$332,800				$329,600				$370,800
			$3,200				$41,200

Price Variance	$ 3,200 ( U)
Quantity Variance	$ 41,200 (F)
Total Material Variance	$ 38,000 ( F)

Calculation;

Actual Quantity : = $32000

Standard Quantity = $3,600 * $10 = $ 36,000

Actual Price = $ 332,800 / $ 32,000 = $10.40​​​​​​​

3. a)

Event No	Account Title and Explanation	Debit	Credit
1	Goods in process inventory	$ 370,800
	Direct Material Price Variance	$ 3,200
	Direct Material Quantity Variance		$ 41,200
	Rowmaterial Inventory		$ 332,800

b)

Event	Account Title and Explanation	Debit	Credi
	Direct Material Quantity Variance	$ 412,00
	Direct Material Price Variance		$ 3,200
	Cost of Goods Sold		$ 38,000