Question

must state whether the Variance is Favourable or Unfavourable. To receive full credit your answer must be labeled as such. For example: An answer such as “- $4500” will not be given full credit, even if the number is correct. The same number shown as “$4500 Favourable” would receive full marks. The following are independent questions: 1. Information on Fleming Company's direct material costs follows: Actual amount of direct materials purchased and used 20,000 kilograms Actual direct material costs $40,000 Standard direct material costs $2.10 per kilogram Calculate the direct materials price variance – 2 marks 2. During March, Younger Company’s direct material costs for product T were as follows: Actual unit purchase price $6.50 per meter Standard quantity allowed for actual production 2,100 meters Quantity purchased and used for actual production 2,300 meters Standard unit price $6.25 per meter Calculate the materials usage variance – 2 marks 3. The following labour standards have been established for a particular product Standard labour hours per unit of output 1.7 hours Standard labour rate $14.25 per hour The following data pertains to operations concerning the product for the last month: Actual hours worked 3,700 hours Actual total labour cost $50,690 Actual output 2,300 units Calculate the labour rate variance – 2 marks 4. Yola Company manufactures a product with standards for direct labour of 4 direct labour-hours per unit at a cost of $12.00 per direct labour-hour. During June, 1,000 units were produced using 4,100 hours at $12.20 per hour. What was the direct labour efficiency variance? Calculate the labour efficiency variance – 2 marks

Answer 1

1.Actual Material 20000kgs

Actual material total cost = 40000$

standard cost $2.10 per kgs

direct materials price variance is difference between total actual cost and standard cost for actual quantity use.

= [Actual rate* Actual Quantity] - [Standard rate * actual quantity]

= [ $40000 ] - [$2.10 * 20000Kgs]

= $40000-$42000

=2000$

As the actual total cost are less than standard cost the proce variance is FAVORABLE

ANSWER : $2000 FAVORABLE

2.ACTUAL PRICE = $6.50

standard quantity = 2100

Actual quantity = 2300

Standard price = $6.25

materials usage variance = [Standard Rate * Actual Quantity ] - [Standard rate * standard quantity]

[$6.25*2300] - [$6.25*2100]

=$14375-$13125

=$1250 UNFAVORABLE   [ACTUAL USAGE IS MORE THAN STANDARD ALLOWED]

3.STANDARD HOURS = 1.7

standard rate 14.25$

Actual hours =3700

Actual labor cost =50690$

units =2300

labour rate variance =[ Actual Rate * Actual Hours] - [ Standard Rate * Actual Hours]

=[50690$] - [$14.25*3700]

=50690$ - 52725$

=$2035 Favorable

4. direct labour efficiency variance = [Actual Hour*Standard rate] - [Standard hour* standard rate]

=[4100hours *$12] - [(4hours*1000units)*$12]

49200$-$48000

=$1200 UNFAVORABLE [ the actual hours are more than standard hours allowed]