Question

The following direct materials and direct labor data pertain to the operations of Laurel Company for the month of August.

Costs
Actual labor rate		$15	per hour
Actual materials price		$190	per ton
Standard labor rate		$14.50	per hour
Standard materials price		$193	per ton

Quantities
Actual hours incurred and used		4,600 hours
Actual quantity of materials purchased and used		1,700 tons
Standard hours used		4,650 hours
Standard quantity of materials used		1,680 tons

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

Total materials variance

Materials price variance

Materials quantity variance

Total labor variance

Labor price variance

Labor quantity variance

Answer 1

calculation of direct material price variance:

= (Standard price per unit of material - Actual price per unit of material) × Actual quantity

= ($193/ton - $190/ton ) × 1700 tonn = $5100 F

Calculation of direct material quantity variance

=(standard quantity of material required for actual production - actual quantity used) × Standard price per unit

(1680tonn-1700 tonn )X $193 = $3860 U

Tototal Material Variance= MPV+MQV

=$5100 F+$3860U=$1240 F

Calculation of direct labor rate variance

= (Standard direct labor rate per hour - actual direct labor rate per hour) × Actual hours used

= ($14.50/hour - $15/hour) × 4600 Hours= $2300 U

Calculation of direct labor efficiency variance:

= (standard hours required for actual production - actual hours used) × standard Rate per Hour

= (4650 - 4600) × $15 = $750 F

Tototal Laour Variance= LRV+LEV

=$2300U+$750F=$1550U