Question

Direct Materials Variances

The following data relate to the direct materials cost for the production of 2,500 automobile tires:

Actual:	48,200 lbs. at $1.75 per lb.
Standard:	46,800 lbs. at $1.7 per lb.

a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Direct Materials Price Variance	$
Direct Materials Quantity Variance	$
Total Direct Materials Cost Variance	$

b. The direct materials price variance should normally be reported to the  . If lower amounts of direct materials had been used because of production efficiencies, the variance would be reported to the  . If the favorable use of raw materials had been caused by the purchase of higher-quality raw materials, the variance should be reported to the  .

Direct Materials and Direct Labor Variance Analysis

Abbeville Fixture Company manufactures units in a small manufacturing facility. The units are made from brass. Manufacturing has 30 employees. Each employee presently provides 35 hours of labor per week. Information about a production week is as follows:

Standard wage per hour	$13.2
Standard labor time per unit	20 min.
Standard number of lbs. of brass	1.8 lbs.
Standard price per lb. of brass	$11.25
Actual price per lb. of brass	$11.5
Actual lbs. of brass used during the week	11,124 lbs.
Number of units produced during the week	6,000
Actual wage per hour	$13.6
Actual hours for the week (30 employees × 35 hours)	1,050 hrs.

Required:

a. Determine the standard cost per unit for direct materials and direct labor. Round the cost per unit to two decimal places.

Direct materials standard cost per unit	$
Direct labor standard cost per unit	$
Total standard cost per unit	$

b. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Round your answers to the nearest whole dollar. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Direct Materials Price Variance	$
Direct Materials Quantity Variance	$
Total Direct Materials Cost Variance	$

c. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Round your answers to the nearest whole dollar. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Direct Labor Rate Variance	$
Direct Labor Time Variance	$
Total Direct Labor Cost Variance	$

Answer 1

QUES 1:

a.
Direct material price variance	2410	Unfavourable
Actual qt * ( std rate-actual rate)
48200*(1.70-1.75)
direct material quantity varIANCe	2380	Unfavourable
std rate * ( std qty - actual qty.)
1.70*(46800-48200)
Direct material cost variance	4790	Unfavourable
(48200*1.75-46800*1.70)
b.
The direct materials price variance should normally be reported to the Purchasing Department . If lower amounts of direct materials had been used because of production efficiencies, the variance would be reported to the Production Supervisor . If the favorable use of raw materials had been caused by the purchase of higher-quality raw materials, the variance should be reported to the Purchasing Department

QUES 2:

Ques 1
Direct materials	20.25
11.25*1.8
direct labor	4.4
13.2*20/60
total unit cost	24.65
Ques 2
Direct material price variance = (AP-SP)*AQ
Direct material price variance =	11124*(11.5-11.25)
Direct material price variance =	2781	U
Direct material quantity variance=(AQ-SQ)*SP
Direct material quantity variance=	(11124-(6000*1.8))*11.25
Direct material quantity variance=	3645	U
Direct Material cost variance=	3645U+2781U
Direct Material cost variance=	6426	U
Ques 3
Direct labor rate variance = (AR-SR)*AH
Direct material price variance =	1050*(13.6-13.2)
Direct material price variance =	420	U
Direct Labor time variance=(AH-SH)*SR
Direct material quantity variance=	(1050-(6000*20/60))*13.2
Direct material quantity variance=	12540	F
Direct Labor cost variance=	12540F+420U
Direct Labor cost variance=	12120	F