Calculating Direct Materials and Direct Labor Variances
Rub-a-Dub Dogs is a local pet grooming shop owned by Max Aslett. Max has prepared the following standard cost card for each dog bath given:
| Standard Quantity | Standard Rate | Standard Unit Cost |
Direct costs |
|
|
|
Shampoo | 2 oz. | $0.10 per oz. | $0.20 |
Water | 20 gal. | 0.05 per gal. | 1.00 |
Direct labor | .75 hr. | 9.00 per hr. | 6.75 |
During the month of July, Max’s employees gave 345 baths. The actual results were 725 ounces of shampoo used (total cost $87), 6,500 gallons of water used (cost of $390), and labor costs for 250 hours (cost of $2,300).
Required:
1.Calculate Rub-a-Dub Dogs’ direct materials variances for both shampoo and water for the month of July.
2. Calculate Rub-a-Dub Dogs’ direct labor variances for the month of July.
3. Identify a possible cause of each variance.
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