Problem 4 Supplemental Problem 1Compute materials and labor

Problem 4 (Supplemental Problem #1)-Compute materials and labor variances Zoller Company produces a dark chocolate candy bar. Recently, the company adopted the following standards for one bar of candy: Direct materials (6.3 oz. @ s0.20) Direct labor (0.08 hr.@ $18.00) Standard prime cost $ 1.26 1.44 270 During the first week of operation, the company experienced the following actual results: a. Bars produced: 143,000 b. Ounces of direct materials purchased: 901,200 ounces at $0.21 per ounce. c. There are no beginning or ending inventories of direct materials. d. Direct labor: 11,300 hours at $17.30 Required: (circle F or U to indicate whether the variance is favorable or unfavorable) 1. Compute the materials price variance:912 Compute the materials quantity usage variance:?4WD F ofD 2. - Compute the total materials variance: 4. Compute the labor rate variance:1110 5. Compute the labor efficiency variance: 2520 6. Compute the total labor variance: 3. F or U or U For U F or U You must show your work to receive credit***

Solution

Solution 1:

1. Material price variance = (AP – SP)AQ

Material price variance = ($0.21 – $0.20) x 901,200

Material price variance = $9,012 U

2. Material quantity Usage Variance = (AQ – SQ*)SP

Material quantity Usage Variance = (901,200 – 900,900)$0.20 = $60 U

*SQ = 143,000 × 6.3 = 900,900 oz.

3. Total material variance = Material price variance + Material quantity usage variance

Total material variance = $9,012 U + $60 U

Total material variance = $9,072 U

4. Labor rate variance = (AR – SR)AH

Labor Rate Variance = ($17.30 – $18.00)11,300

Labor rate variance = $7,910 F

5. Labor efficiency variance = (AH – SH*)SR

Labor efficiency variance = (11,300 – 11,440)$18.00

Labor efficiency variance = $2,520 F

6. Total labor variance =Labor rate variance + Labor efficiency variance

Total labor variance = $7,910 F + $2,520 F

Total labor variance = $10,430 F

Solution 2:

1. Material Price Variance = (AP – SP)AQ

Material Price Variance = ($2.50 – $2.60)274,000

Material Price Variance  = $27,400 F

2.

Material quantity Usage Variance = (AQ – SQ)SP

Material quantity Usage Variance = (270,300 – 265,000*)$2.60

Material quantity Usage Variance = $13,780 U

*SQ = 5 × 53,000

3. Total material variance = Material price variance + Material quantity Usage Variance

Total material variance = $27,400 F + $13,780 U

Total material variance = $13,620 F

4. Labor rate variance = (AR – SR)AH

Labor rate variance = ($17.95 – $18.00)40,100

Labor rate variance= $2,005 F

5. Labor efficiency variance = (AH – SH)SR

Labor efficiency variance = (40,100 – 39,750*)$18.00

Labor efficiency variance = $6,300 U

*SH = 0.75 × 53,000

6. Total labor variance = Labor rate variance + Labor efficiency variance

Total labor variance = $2,005 F + $6,300 U

Total labor variance = $4,295 U