Question

Problem 6

Part a) Given the following information, what is the amount of: i) the direct materials cost variance and ii) the direct materials efficiency variance?

Actual direct materials cost = $1.00 per pound
Standard direct materials cost = $1.10 per pound
Actual quantity purchased and used = 2,000 pounds
Standard quantity that should have been used = 1,800 pounds

1. _________________________

2. _________________________

Part b) Given the following information, what is the amount of: i) the direct labor cost variance and ii) the direct labor efficiency variance?

Actual direct labor cost = $20.00 per hour
Standard direct labor cost = $21,00 per hour
Actual direct labor hours = 200 hours
Standard quantity of labor hours that should have been used = 180 hours

1. ________________________

2. ________________________

Answer 1

Part A
Actual Price	1
Standard price	1.1
Actual Qty	2000
Standard qty	1800
Direct material cost variance	(AP-SP)AQ
	(1-1.1)*2000
	-200
	200	Favorable
DM efficiency variance	(AQ-SQ)SP
	(2000-1800)*1.1
	220	Unfavorable
Part B
Actual direct labor cost	20
Standard direct labor cost	21
Actual direct labor hours	200
Standard direct labor hours	180
Direct labor cost variance	(AP-SP)Act hr
	(20-21)*200
	-200
	200	Favorable
Direct labor efficiency variance	(Act Hr-Std Hr)SP
	(200-180)*21
	420	Unfavorable

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