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The following data pertain to June operations for the Splish Company: Actual Inputs for Each Unit...

The following data pertain to June operations for the Splish Company: Actual Inputs for Each Unit of Output Actual Price per Unit of Input Direct material 10 metre $8 per metre Direct labour 2 hours $9 per hour Actual output was 690 units. The Company's per unit standards call for 8.70 metres of direct material at $9.30 per metre and 3.10 hours of direct labour at $9.50 per hour. Compute the price and usage variances for direct material and direct labour.

Solutions

Expert Solution

Material variances

Standard quantity = 8.70 metre per unit

Standard price = $9.30 per metre

Actual quantity = 10 metre per unit

Actual price = $8 per metre

Actual output = 690 unit

Total actual quantity used = Actual quantity x Actual output

= 10 x 690

= 6,900 metre

Standard quantity for actual output = Standard quantity x Actual output

= 8.70 x 690

= 6,003 metre

Direct material price variance= Actual quantity x (Standard price - Actual price)

= 6,900 x (9.30-8)

= 6,900 x 1.30

= $8,970 favorable

Direct materials uses variance = Standard price x ( Standard quantity - Actual quantity)

= 9.30 x (6,003-6,900)

= 9.30 x (-897)

= $8,342.10 unfavorable

Labor variance

Standard rate = $9 per hour

Standard time = 2 hour per unit

Actual time = 3.10 hour per unit

Actual rate = $9.50 per hour

Actual output = 690 units

Total actual time used = Actual time x Actual output

= 3.10 x 690

= 2,139 hours

Standard time for actual output = Standard time x Actual output

= 2 x 690

= 1,380

Direct labor rate variance = Actual time x (standard rate- Actual rate)

= 2,139 x (9-9.50)

= 2,139 x (-0.50)

= $1,069.50 unfavorable

Direct labor usage variance = Standard rate x ( standard time- actual time)

= 9 x (1,380-2,139)

= 9 x (-759)

= $6,831 unfavorable

ekkarill92 answered 2 years ago
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