In: Accounting
The following information pertains to the standard costs and actual activity for Repine Company for September:
Standard cost per unit:
Direct materials. . . .. 4 units of material A x $6.00 per unit, 1 unit of material B x $8.00 per unit
Direct labor. . . . . . . 3 hours x $18.00 per hour
Activity for September
Materials purchased:
Material A . . . . . . . . . 6,750 units x $6.20 per unit
Material B . . . . . . . . . 1,650 units x $8.50 per unit
Materials used:
Material A . . . . . . . . . 6,225 units
Material B . . . . . . . . . 1,508 units
Direct labor used. . . .4,425 hours x $18.80 per hour
Production output. . ... 1,500 units
There were no beginning direct materials inventories.
a) Determine the materials price and quantity variances.
b) Determine the labor rate and efficiency variances.
Answer:
a) Determine the materials price and quantity variances.
the materials price variances
Material Price variance |
||
(Actual price- standard price)x Actual Quantity |
Material Price variance |
|
Material-A |
( 6.20 -6 ) x 6,225 |
1245 Unfavorable |
Material- B |
( 8.50 - 8) x 1,508 |
754 Unfavorable |
1999 Unfavorable |
||
Material Price variance =1999 unfavorable |
the materials quantity variances
Material Quantity variance |
||
(Actual quantity- standard quantity)x standard price |
Material Quantity variance |
|
Material-A |
( 6225- 6000) x 6 |
1350 Unfavorable |
(standard quantity =1500*4=6000 |
||
Material- B |
( 1508-1500 ) x 8 |
64 Unfavorable |
(standard quantity =1500*1=1500 |
||
1414 Unfavorable |
||
Material Quantity variance =1414 Unfavorable |
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b)
Determine the labor rate and efficiency variances.
labor rate variances.
Labor rate variance |
||
(Actual rate- standard rate)x Actual Hours |
Labor rate variance |
|
(18.80 -18 ) x 4425 |
3540 Unfavorable |
|
Labor rate variance =3540 unfavorable |
labor efficiency variances.
Labor efficiency variance |
||
(Actual Hours - standard Hours )slandered rate |
Labor rate variance |
|
(4425 -4500 ) x 18 |
1350 Favorable |
|
standard Hours =1500x3=4500 |
||
Labor efficiency variance =1350 Favorable |