In: Accounting
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.
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 |
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 |