Question

Computation of Variable Cost Variances
The following information pertains to the standard costs and actual activity for Tyler Company for September:

Standard cost per unit
Direct materials	4 units of material A × $2.00 per unit
	1 unit of material B × $3.00 per unit
Direct labor	3 hours × $8.00 per hour
Activity for September
Materials purchased
Material A	2,600 units × $2.05 per unit
Material B	700 units × $3.10 per unit
Materials used
Material A	2,250 units
Material B	605 units
Direct labor used	1,480 hours × $8.30 per hour
Production output	500 units

There were no beginning direct materials inventories.

(a) Determine the materials price and quantity variances.

Do not round final answers.

	Material A		Material B
Materials price variance	$Answer	AnswerFU	$Answer	AnswerFU
Materials quantity variance	Answer	AnswerFU	Answer	AnswerFU

(b) Determine the labor rate and efficiency variances.

Labor rate variance	$Answer	AnswerFU
Labor efficiency variance	Answer	AnswerFU

Answer 1

Solution a:

Material A:

Standard price of material A = $2

Actual price of material A = $2.05

Actual quantity purchased = 2600 units

Actual quantity used = 2250 units

Standard quantity of material = 500 * 4 = 2000 units

Material price variance = (SP - AP) * AQ purchased = ($2 - $2.05) * 2600 = $130 U

Material quantity variance = (SQ - AQ) * SP = (2000 - 2250) * $2 = $500 U

Material B:

Standard price of material B = $3

Actual price of material B = $3.10

Actual quantity purchased = 700 units

Actual quantity used = 605 units

Standard quantity of material = 500 * 1 = 500 units

Material price variance = (SP - AP) * AQ purchased = ($3 - $3.10) * 700 = $70 U

Material quantity variance = (SQ - AQ) * SP = (500 - 605) * $3 = $315 U

Solution b:

Standard rate of direct labor = $8

Actual rate of direct labor = $8.30

Actual hours of direct labor = 1480 hours

Standard hours of direct labor = 500 * 3 = 1500 units

Direct labor rate variance = (SR - AR) * AH = ($8 - $8.30) * 1480 = $444 U

Direct labor efficiency variance = (SH - AH) * SR = (1500 - 1480) * $8 = $160 F