Question

The following data is given for the Taylor Company:

Budgeted production 1,000 units
Actual production 980 units
Materials:
Standard price per lb $2.00
Standard pounds per completed unit 12
Actual pounds purchased and used in production 11,800
Actual price paid for materials $23,000
Labor:
Standard hourly labor rate $14 per hour
Standard hours allowed per completed unit 4.5
Actual labor hours worked 4,560
Actual total labor costs $62,928
Overhead:
Actual and budgeted fixed overhead $27,000
Standard variable overhead rate $3.50 per standard labor hour
Overhead is applied on standard labor hours.

The direct material prive variance is? The direct material quantity variance is?

Answer 1

Answer

• Direct material price Variance = $ 600 F

Material Price Variance
(	Standard Rate	-	Actual Rate = $ 23000 / 11800 pounds	)	x	Actual Quantity
(	$                                2.00	-	$                       1.95	)	x	11800
	600
	Variance		$                  600.00			Favourable-F

• Direct material quantity variance = $ 80 U

Material Quantity Variance
(	Standard Quantity = 980 units x 12 pounds	-	Actual Quantity	)	x	Standard Rate
(	11760	-	11800	)	x	$                           2.00
	-80
	Variance		$                    80.00			Unfavourable-U