The following information describes actual production activities of the Oliver Corp.: Raw materials used …………………… 12,000...

The following information describes actual production activities of the Oliver Corp.: Raw materials used …………………… 12,000 lbs. at $2.50 per lb. Factory payroll ………………………... 3,500 hours for a total of $45,500 15,000 units were completed during the year Budgeted standards for each unit produced: 1 lb. of raw material at $2.25 per lb. 15 minutes of direct labor at $12.50 per hour Compute the direct materials price and quantity and the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.

Expert Solution

Requirements asked

Material Price Variance	$ 3,000.00	Unfavourable-U
Material Quantity Variance	$ 6,750.00	Favourable-F

Labor Rate Variance	$ 1,750.00	Unfavourable-U
Labour Efficiency Variance	$ 3,125.00	Favourable-F

Workings

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$ 2.25	-	$ 2.50	)	x	12000
	-3000
	Variance		$ 3,000.00			Unfavourable-U

Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	15000	-	12000	)	x	$ 2.25
	6750
	Variance		$ 6,750.00			Favourable-F

Labor Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$ 12.50	-	$ 13.00	)	x	3500
	-1750
	Variance		$ 1,750.00			Unfavourable-U

Labour Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	3750	-	3500	)	x	$ 12.50
	3125
	Variance		$ 3,125.00			Favourable-F

ekkarill92 answered 2 years ago

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