Hours or Rate Cost Direct materials Direct labor 46 pounds 2

Hours or Rate Cost Direct materials Direct labor 4.6 pounds 2.50 per pound $11.50 0.2 hours 18.00 per hour $ 3.60 During the most recent month, the following activity was recorded a. Twenty thousand pounds of material were purchased at a cost of $2.35 per pound. b. All of the material purchased was used to produce 4,000 units of Zoom. c. 750 hours of direct labor time were recorded at a total labor cost of $14,925 Required 1. Compute the materials price and quantity variances for the month 2. Compute the labor rate and efficiency variances for the month For all requirements, Indicate the effect of each variance by selecting \"F\" for favorable, \"U\" for unfavorable, and \"None\" for no effect (i.e., zero variance). Input all amounts as positive values.) 1. Materials price variance Materials quantity variance 2.Labor rate variance Labor efficiency variance

Solution

Actual DATA for

4000

units

Quantity (AQ)

Rate (AR)

Actual Cost

Direct Material

20000

$               2.35

$           47,000.00

Direct labor

750

$            19.90

$           14,925.00

Standard DATA for

4000

units

Quantity (SQ)

Rate (SR)

Standard Cost

Direct Material

18400

$               2.50

$           46,000.00

Direct labor

800

$            18.00

$           14,400.00

Material Price Variance

(

Standard Rate

-

Actual Rate

)

x

Actual Quantity

(

$                        2.50

-

$                       2.35

)

x

20000

3000

Variance

3000

Favorable-F

Material Quantity Variance

(

Standard Quantity

-

Actual Quantity

)

x

Standard Rate

(

18400

-

20000

)

x

$                           2.50

-4000

Variance

4000

Unfavorable-U

Labor Rate Variance

(

Standard Rate

-

Actual Rate

)

x

Actual Labor Hours

(

$                     18.00

-

$                    19.90

)

x

750

-1425

Variance

1425

Unfavorable-U

Labour Efficiency Variance

(

Standard Hours

-

Actual Hours

)

x

Standard Rate

(

800

-

750

)

x

$                        18.00

900

Variance

900

Favorable-F

Answer

Material Price Variance                                                 $ 3000 F

Material Quantity Variance                          $4000 U

Labor Rate Variance                                        $1425 U

Labor Efficiency Variance                              $ 900 F

F* Favorable

U*Unfavorable

Actual DATA for	4000	units
	Quantity (AQ)	Rate (AR)	Actual Cost
Direct Material	20000	$               2.35	$           47,000.00
Direct labor	750	$            19.90	$           14,925.00