Question

At the beginning of June, Kimber Toy Company budgeted 23,000 toy action figures to be manufactured in June at standard direct materials and direct labor costs as follows:

Direct materials	$23,000
Direct labor	10,350
Total	$33,350

The standard materials price is $0.50 per pound. The standard direct labor rate is $9.00 per hour. At the end of June, the actual direct materials and direct labor costs were as follows:

Actual direct materials	$21,100
Actual direct labor	9,500
Total	$30,600

There were no direct materials price or direct labor rate variances for June. In addition, assume no changes in the direct materials inventory balances in June. Kimber Toy Company actually produced 20,500 units during June.

Determine the direct materials quantity and direct labor time variances. Round your per unit computations to two decimal places, if required. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Direct materials quantity variance	$
Direct labor time variance	$

Answer 1

Direct Material Quantity Variance

$ 600

Direct Labor time variance

$ 279

Workings:

a.

At standard,

Total Costs

Standard price or rate

Standard Quantity or hours

Budgeted production

Standard Quantity or hour per unit

Direct Materials

$        23,000

$             0.50

46,000

23,000

2.00

Direct Labor

$        10,350

$             9.00

1,150

23,000

0.05

b.

Actual units produced

20500

Standard Material Quantity

20,500

x

2.00

=

41,000

Standard Labor hoours

20,500

x

0.05

=

1,025

c.

There were no direct material price or labor rate variance.So, Standard Material Price or Standard labor rate is also Actual Material Price and Actual labor rate respectively.

Now,

Actual Costs

Actual rate

Actual Quantity

Materials

$        21,100

$                 0.50

42,200

Labors

$          9,500

$                 9.00

1,056

d.

Material Quantity Variance

=

(Standard Quantity-Actual Quantity)*Standard Rate

=

(41000-42200)*0.50

=

$               600

Unfavorable

Direct labor time variance

=

(Standard Time -Actual Time)*Standard labor rate

=

(1025-1056)*9.00

=

$         279.00

Unfavorable