Question

Problem 23-2A (Part Level Submission) Ayala Corporation accumulates the following data relative to jobs started and finished during the month of June 2017. Costs and Production Data Actual Standard Raw materials unit cost $2.30 $2.20 Raw materials units used 11,100 10,400 Direct labor payroll $174,640 $171,360 Direct labor hours worked 14,800 15,300 Manufacturing overhead incurred $214,678 Manufacturing overhead applied $218,178 Machine hours expected to be used at normal capacity 43,500 Budgeted fixed overhead for June $65,250 Variable overhead rate per machine hour $3.10 Fixed overhead rate per machine hour $1.50 Overhead is applied on the basis of standard machine hours. 3.10 hours of machine time are required for each direct labor hour. The jobs were sold for $476,000. Selling and administrative expenses were $40,000. Assume that the amount of raw materials purchased equaled the amount used. (a) Compute all of the variances for (1) direct materials and (2) direct labor. (Round answers to 0 decimal places, e.g. 125.) (1) Total materials variance $ Materials price variance $ Materials quantity variance $ (2) Total labor variance $ Labor price variance $ Labor quantity variance $

Answer 1

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Standard Material Price		$         2.20
Standard Quantity		10400
Actual Quantity		11100
Actual Quantity used		11100
Actual Matrial Price		$         2.30
Material Price Variance	AQ(AP-SP)
	(Actual Price	-	Standard Price)	*	Actual Quantity
	$                                   2.30	-	$              2.20	*	11100
	$                                 1,110	Unfavorable
Material Quantity Variance	SP(AQ-SQ)
	(Actual Quantity	-	Standard Qty)	*	Standard Price
	11100	-	10400	*	$               2.20
	$                            1,540.00	Unfavorable
Total Direct Material variance	Price variance+Qty/Eff Var	$ 2,650.00	Unfavorable
Standard Hour Rate		$       11.20
Standard Hour		15300
Actual Hours		14800
Actual Hour Rate		$       11.80
Labor Rate Variance	AH(AR-SR)
	(Actual Rate	-	Standard Rate)	*	Actual Hours
	$                                 11.80	-	$            11.20	*	14800
	$                                 8,880	Unfavorable
Labor Efficiency Variance	SR(AH-SH)
	(Actual Quantity	-	Standard Qty)	*	Standard Price
	14800	-	15300	*	$             11.20
	$                                -5,600	Favorable
Total Direct Labor Varianve	Rate Variance+Eff Variance	$       3,280	Unfavorable