Exercise 117 Levine Inc which produces a single product has

Exercise 11-7

Levine Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product.

During the month of April, the company manufactures 350 units and incurs the following actual costs.

Compute the total, price, and quantity variances for materials and labor.

Direct materials (7 pounds at $1.60 per pound)		$11.20
Direct labor (1 hours at $10.00 per hour)		$10.00

Solution

Total materials variance = 3600-(350*11.2)= $320 Favorable Materials price variance = 3600-(2000*1.6)= $400 Unfavorable Materials quantity variance = 1.6*(2000-350*7)= $720 Favorable Total labor variance = 3663-(350*10) = $163 Unfavorable Labor price variance = 3663-(370*10)= $37 Favorable Labor quantity variance = 10*(370-350*1)= $200 Unfavorable