Homework SourseOrion Corporation has established the following standards fo
Orion Corporation has established the following standards for the prime costs of one unit of its chief product, dartboards.
Standard Quantity
During June, Orion purchased 227,000 pounds of direct material at a total cost of $274,670. The total wages for June were $72,576, 75 percent of which were for direct labor. Orion manufactured 36,000 dartboards during June, using 205,200 pounds of the direct material purchased in June and 11,520 direct-labor hours. Required: Compute the following variances for June. (Do not round intermediate calculations. Indicate the effect of each variance by selecting \"Favorable\" or \"Unfavorable\". Select \"None\" and enter \"0\" for no effect (i.e., zero variance).)
| Standard Quantity | Standard Price or Rate | Standard Cost Direct material | |
| Direct Material | 6 pounds | $1.1 per pound | $6.60 |
| Direct Labor | .3 | $6.00 | $1.8 |
Solution
Variances :
Material quantity variance = (Standard quantity-actual quantity)standard rate per pound
= (36000*3-205200)1.1
Material quantity varianc = 11880 Favourable
Material price variance = (Standard price-actual price)Actual quantity purchased
= (1.1*227000-274670)
Material price variance = 24970 Unfavourable
Labour efficiency variance = (Standard hour-actual hour)standard rate per hour
= (36000*.3-11520)6
Labour efficiency variance = 4320 Unfavourable
Labour rate variance = (Standard rate-actual rate)actual hours
= (6*11520-54432)
Labour rate variance = 14688 Favourable
