Question

Kopecky Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product:

Per unit

Direct materials (6 kg at $2.50 per kg) $15.00

Direct labour (3.1 hrs at $12 per hr) $37.20

During the month of April, the company manufactures 250 units and incurs the following actual costs:

Direct materials purchased and used (1,600 kgs) $4,192

Direct labour (760 hours) $8,740

Calculate the price and quantity variances for direct materials, as well as the total variance. Make sure you indicate if the variances are favourable or unfavourable.

Calculate the rate and efficiency variances for direct labour, as well as the total variance. Make sure you indicate if the variances are favourable or unfavourable.

Answer 1

1	Total material variance =	Actual cost - Standard cost
	Total material variance =	4192 - (15*250)
	Total material variance	442	UnFavorable
2	Actual rate	2.62	Per pound
	Direct material price variance =	(Actual rate - Standard rate) * Actual quantity
	Direct material price variance =	(2.62-2.50) * 1600
	Direct material price variance =	192	UnFavorable
3	Standard Material for actual production	6*250	1,500	kg
	Direct material quantity variance=	( Actual material - Standard material for acual production) *Standard rate
	Direct material quantity variance=	(1600-1500)*2.50
		250	UnFavorable
4	Total labor variance=	Standard cost for labor -Actual cost
	Total labor variance =	(37.20*250)-8740
	Total labor variance =	560	Favorable
5	Actual rate	11.50	per hour
	Labor rate variance =	(Standard rate - actual rate) * actual Hours
	Labor rate variance =	(12-11.50 ) * 760
		380	Favorable
6	Standard labor hours for actual production	3.1*250	775	Hours
	Labor effiency variance= (Standard hours for acual production - Actual hours ) *Standard rate
		=(775-760 )* 12
		180	Favorable