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		$180	per ton
Standard labor rate		$14.50	per hour
Standard materials price		$184	per ton

Quantities
Actual hours incurred and used		4,000 hours
Actual quantity of materials purchased and used		1,300 tons
Standard hours used		4,090 hours
Standard quantity of materials used		1,290 tons

(a)

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

Total materials variance		$enter a dollar amount		select a type of the variance                                                          Neither favorable nor unfavorableFavorableUnfavorable
Materials price variance		$enter a dollar amount		select a type of the variance                                                          UnfavorableNeither favorable nor unfavorableFavorable
Materials quantity variance		$enter a dollar amount		select a type of the variance                                                          FavorableNeither favorable nor unfavorableUnfavorable
Total labor variance		$enter a dollar amount		select a type of the variance                                                          UnfavorableFavorableNeither favorable nor unfavorable
Labor price variance		$enter a dollar amount		select a type of the variance                                                          UnfavorableFavorableNeither favorable nor unfavorable
Labor quantity variance		$enter a dollar amount		select a type of the variance                                                          FavorableNeither favorable nor unfavorableUnfavorable

Answer 1

• Workings

Standard DATA for
	Quantity (SQ)	Rate (SR)	Standard Cost
Direct Material	1290	$              184.00	$        237,360.00
Direct labor	4090	$                14.50	$           59,305.00

Actual DATA for
	Quantity (AQ)	Rate (AR)	Actual Cost
Direct Material	1300	$              180.00	$        234,000.00
Direct labor	4000	$                15.00	$           60,000.00

• Variances with calculations

Total Material Variance
(	Standard Cost	-	Actual Cost	)
(	$                   237,360.00	-	$          234,000.00	)
	3360
	Variance		$              3,360.00			Favourable-F

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                            184.00	-	$                  180.00	)	x	1300
	5200
	Variance		$              5,200.00			Favourable-F
Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	1290	-	1300	)	x	$                      184.00
	-1840
	Variance		$              1,840.00			Unfavourable-U

Total Labor Variance
(	Standard Cost	-	Actual Cost	)
(	$                      59,305.00	-	$            60,000.00	)
	-695
	Variance		$                  695.00			Unfavourable-U

Labor Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                              14.50	-	$                    15.00	)	x	4000
	-2000
	Variance		$              2,000.00			Unfavourable-U
Labour Quantity Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	4090	-	4000	)	x	$                        14.50
	1305
	Variance		$              1,305.00			Favourable-F