Question

Suds & Cuts is a local pet grooming shop owned by Collin Bark. Collin has prepared the following standard cost card for each dog bath given:

	Standard Quantity			Standard Rate			Standard Unit Cost
Shampoo	2.6	oz.		$	0.20	per oz.		$	0.52
Water	24	gal.		$	0.05	per gal.			1.20
Direct labor	1.5	hr.		$	12.00	per hr.			18.00

During the month of July, Collin’s employees gave 440 baths. The actual results were 770 ounces of shampoo used (cost of $231.00), 7,400 gallons of water used (cost of $592), and labor costs for 380 hours (cost of $4,940).

Required:
1. Calculate Suds & Cuts direct materials variances for both shampoo and water for the month of July. (Round your answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)



2. Calculate Suds & Cuts direct labor variances for the month of July. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable. Round your answers to nearest dollar amount.)

Answer 1

• All working forms part of the answer
• Requirement 1

--Direct Material Variances for Shampoo:

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                        0.20	-	$                       0.30	)	x	770
	-77
	Variance		$                    77.00			Unfavourable-U
Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	1144	-	770	)	x	$                           0.20
	74.8
	Variance		$                    74.80			Favourable-F
Material Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$                   228.80	-	$                  231.00	)
	-2.2
	Variance		$                       2.20			Unfavourable-U

--Direct Material Variances for Water:

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                        0.05	-	$                       0.08	)	x	7400
	-222
	Variance		$                  222.00			Unfavourable-U
Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	10560	-	7400	)	x	$                           0.05
	158
	Variance		$                  158.00			Favourable-F
Material Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$                   528.00	-	$                  592.00	)
	-64
	Variance		$                    64.00			Unfavourable-U

• Requirement 2

Labor Variances

Labor Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                     12.00	-	$                    13.00	)	x	380
	-380
	Variance		$                  380.00			Unfavourable-U
Labour Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	660	-	380	)	x	$                        12.00
	3360
	Variance		$              3,360.00			Favourable-F
Labor Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$               7,920.00	-	$              4,940.00	)
	2980
	Variance		$              2,980.00			Favourable-F