Question

standard cost sheet for one unit of the product.

Direct materials (6 pounds at $1.60 per pound)		$9.60
Direct labor (6 hours at $10.00 per hour)		$60.00

During the month of April, the company manufactures 310 units and incurs the following actual costs.

Direct materials purchased and used (2,400 pounds)		$4,080
Direct labor (1,880 hours)		$18,612

What is the total, price, and quantity variances for materials and labor.

Answer 1

Material Price variance = Actual Quantity purchased* (Actual Price - Standard Price)

Material Price variance = 2,400 * (($4,080/2,400) - $1.60)

Material Price variance = $240 U

Material Quantity variance = Standard Price * (Actual Quantity used - Standard Quantity)

Material Quantity variance = $1.60 * (2,400 - (310*6))

Material Quantity variance = $864 U

Labour rate variance = (actual Rate - Standard Rate) * Actual Quantity

Labour rate variance = (($18,612/1,880) - $10) * 1,880

Labour rate variance = $188 F

Labour Efficiency Variance = (Actual Hours - Standard Hours) * Standard Rate

Labour Efficiency Variance = (1,880 - (310*6)) * $10

Labour Efficiency Variance = $200 U

Total labour variance = Actual labour cost - standard labour cost

Total labour variance = $18,612 - (310*6*$10)

Total labour variance = $12 U

Total material variance = Actual material cost - standard material cost

Total material variance = $4,080 - (310*6*$1.60)

Total material variance = $1,104 U