Question

Levine Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product.

Direct materials (6 pounds at $3.20 per pound) $19.20

Direct labor (1 hours at $12.00 per hour) $12.00

During the month of April, the company manufactures 340 units and incurs the following actual costs.

Direct materials purchased and used (2,500 pounds) $8,250

Direct labor (360 hours) $4,248

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

Total materials variance $ U or F

Materials price variance $ U or F

'Materials quantity variance $ U or F

Total labor variance $ U or F

Labor price variance $ U or F

Labor quantity variance $ U or F

Answer 1

Standard DATA for		340	units
	Quantity (SQ)	Rate (SR)	Standard Cost
Direct Material (340*6)	2040	$               3.20	$             6,528.00
Direct labor (340*1)	340	$            12.00	$             4,080.00
Total Standard Cost			$           10,608.00

Actual DATA for		340	units
	Quantity (AQ)	Rate (AR)	Actual Cost
Direct Material	2500	$               3.30	$             8,250.00
Direct labor	360	$            11.80	$             4,248.00
Total Actual Cost			$           12,498.00

Material Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$               6,528.00	-	$              8,250.00	)
	-1722
	Variance		1722			Unfavourable-U

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                        3.20	-	$                       3.30	)	x	2500
	-250
	Variance		250			Unfavourable-U

Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	2040	-	2500	)	x	$                           3.20
	-1472
	Variance		1472			Unfavourable-U

Labor Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$               4,080.00	-	$              4,248.00	)
	-168
	Variance		168			Unfavourable-U

Labor Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                     12.00	-	$                    11.80	)	x	360
	72
	Variance		72			Favourable-F

Labour Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	340	-	360	)	x	$                        12.00
	-240
	Variance		240			Unfavourable-U

Total materials variance $1722 U

Materials price variance $2500 U

'Materials quantity variance $1472 U

Total labor variance $168 U

Labor price variance $72 F

Labor quantity variance $240 U