Question

Levine Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product.

Direct materials (6 pounds at $1.50 per pound)		$9.00
Direct labor (1 hours at $10.00 per hour)		$10.00

During the month of April, the company manufactures 150 units and incurs the following actual costs.

Direct materials purchased and used (1,500 pounds)		$2,400
Direct labor (160 hours)		$1,584

Compute the total, price, and quantity variances for materials and labor.

Total Material variance, Material Price Variance Material Quantity variance, Total Labor , Labor price and Labor Quantity Variance

Answer 1

• All working forms part of the answer
• Total Material variance

Total Material Cost Variance
(	Standard Cost = 150 x 9	-	Actual Cost	)
(	$               1,350.00	-	$              2,400.00	)
	-1050
	Variance		$              1,050.00			Unfavourable-U

• Material Price Variance

Material Price Variance
(	Standard Rate	-	Actual Rate = 2400/1500	)	x	Actual Quantity
(	$                        1.50	-	$                       1.60	)	x	1500
	-150
	Variance		$                  150.00			Unfavourable-U

• Material Quantity Variance

Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	900	-	1500	)	x	$                          1.50
	-900
	Variance		$                  900.00			Unfavourable-U

• Total Labor Cost Variance

Total Labor Cost Variance
(	Standard Cost = 150 units x 10	-	Actual Cost	)
(	$              1,500.00	-	$              1,584.00	)
	-84
	Variance		$                    84.00			Unfavourable-U

• Labor Price variance

Labor Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                     10.00	-	$                       9.90	)	x	160
	16
	Variance		$                    16.00			Favourable-F

• Labor Quantity Variance

Labour Quantity Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	150	-	160	)	x	$                        10.00
	-100
	Variance		$                  100.00			Unfavourable-U