Question

In: Accounting

Use the following information for the Exercises below. [The following information applies to the questions displayed...

Use the following information for the Exercises below.

[The following information applies to the questions displayed below.]

A manufactured product has the following information for June.

Standard Actual
Direct materials 5 lbs. @ $7 per lb. 43,000 lbs. @ $7.20 per lb.
Direct labor 2 hrs. @ $17 per hr. 16,700 hrs. @ $17.40 per hr.
Overhead 2 hrs. @ $13 per hr. $ 227,900
Units manufactured 8,500

Exercise 23-9 Direct materials variances LO P3

Compute the direct materials price variance and the direct materials quantity variance. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance. Round "Cost per unit" answers to 2 decimal places.)

Compute the direct labor rate variance and the direct labor efficiency variance. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance. Round "Rate per hour" answers to 2 decimal places.)

AH = Actual Hours
SH = Standard Hours
AR = Actual Rate
SR = Standard Rate

AQ = Actual Quantity
SQ = Standard Quantity
AP = Actual Price
SP = Standard Price


Solutions

Expert Solution

Actual Cost Standard Cost
AQ x AP AQ x SP SQ x SP
           43,000 x 7.2          43,000 x 7      42,500 x 7
309600    301,000 297500
        8,600         3,500
Direct material Price Variance            8,600 Unfavourable
Direct material Quantity Variance            3,500 Unfavourable
Total material variance          12,100 Unfavourable
Actual Cost Standard Cost
AH x AR AH x SR SH x SR
16700 x 17.4 16700 x 17 17000 x 17
290580 283900 289000
6680 5100
Direct labor rate Variance 6680 Unfavourable
Direct labor efficiency Variance 5100 Favourable
Total labor variance 1580 Unfavourable

ekkarill92 answered 2 years ago
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