Question

Computation of Variable Cost Variances The following information pertains to the standard costs and actual activity for Repine Company for September: Standard cost per unit Direct materials 4 units of material A x $ 6.00 per unit

1 unit of material B x $ 8.00 per unit

Direct labor 3 hours x $ 18.00 per hour

Activity for September

Materials purchased

Material A 6,750 units x $ 6.20 per unit

Material B 1,650 units x $ 8.50 per unit

Materials used

Material A 6,225 units

Material B 1,508 units

Direct labor used 4,425 hours x $ 18.80 per hour

Production output 1,500 units

There were no beginning direct materials inventories.

(a) Determine the materials price and quantity variances.

Material A Material B

Materials price variance $Answer Answer F U $Answer Answer F U

Materials quantity variance Answer Answer F U Answer Answer F U

(b) Determine the labor rate and efficiency variances.

Labor rate variance $Answer Answer F U

Labor efficiency variance $Answer Answer F U

Answer 1

Computation of Material Price Variance
	Standarrd costof Raw material/Unit	$32
	Material A:	$6/Unit
	Material B :	$8/Unit
	Actual Cost of Raw Material/Unit
	Material A :	$6.20/Unit
	Material B:	$8.50/Unit
	Actual Material Consumed
	Material A :	6225 Unit
	Material B:	1508 Units
	Material Price Variance
	( Standard Price- Actual Price)* Actual Quantity
	Material A: ( $6-$6.20 )* 6225 Unit	($1,245)	Unfavourable
	Material B : ( $ 8- $8.50)* 1508 Unit	($754)	Unfavourable
	Total Material Price Variance	($1,999)	Unfavourable
Computation of Material Quantity Variance
	Standard Quantity of Raw Material
	Material A: (4 Unit* 1500 Unit)	6000 Unit
	Material B : ( 1 Unit*1500 Unit)	1500 Unit
	Actual material Consumed
	Material A: ( 6225)	6225 Unit
	Material B : ( 1508)	1508 Unit
	Material Quanitity Variance
	( Standard Quanity - Actual Quantity) Standard Price
	Material A: (6000 Unit-6225 Unit) * $6	-$1,350.00	Unfavourable
	Material B: ( 1500 Unit-1508 Unit) * $8	-$64.00	Unfavourable
	Total Material Quantity Variance	-$1,414.00	Unfavourable
Computation of Labour Rate Variance
	Standarrd Rate of Direc Labour	$18.0
	Actual Rate of Direc Labour	$18.80
	Actual Labour Hour used	4425 Hour
	Labour Rate Variance
	( Standard Rate - Actual Rate)* Actual Labour Hour Used
	( $18-$18.80) * 4425 Hour	($3,540)	Unfavourable
Computation of Labour Efficiency Variance
	Standard Labout Hour Required for 1500 Unit Produced ( 3 Hour* 1500 Unit)	4500 Hour
	Actual Labour Hour Used	4425 Hour
	Standard Rate of Direc Labour	$18/ Hour
	Labour Efficiency Variance
	( Standard l Hours - Actual Hour) Standard Price	$1,350.00	Favourable
	(4500-4425 Hour) * $18/Hour