Question

Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below:

	Standard Quantity or Hours		Standard Price or Rate			Standard Cost
Direct materials	6.30	pounds	$	2.50	per pound	$	15.75
Direct labor	0.50	hours	$	10.50	per hour	$	5.25

During the most recent month, the following activity was recorded:

Twelve thousand two hundred pounds of material were purchased at a cost of $2.40 per pound.

The company produced only 1,220 units, using 10,980 pounds of material. (The rest of the material purchased remained in raw materials inventory.)

710 hours of direct labor time were recorded at a total labor cost of $8,520.

Required:

Compute the materials price and quantity variances for the month.

	Materials price variance Materials quantity variance

Answer 1