In: Accounting
Suds & Cuts is a local pet grooming shop owned by Collin Bark. Collin has prepared the following standard cost card for each dog bath given: Standard Quantity Standard Rate Standard Unit Cost Shampoo 1.7 oz. $ 0.70 per oz. $ 1.19 Water 15 gal. $ 0.05 per gal. 0.75 Direct labor 1.05 hr. $ 10.00 per hr. 10.50 During the month of July, Collin’s employees gave 350 baths. The actual results were 725 ounces of shampoo used (cost of $558.25), 6,500 gallons of water used (cost of $455), and labor costs for 290 hours (cost of $3,306).
Required: 1. Calculate Suds & Cuts direct materials variances for both shampoo and water for the month of July. (Round your answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)
Direct Materials Per Variance? Direct materials quantity variance?
The formulas for calcuating direct material price and direct material quantity variance are given below:
Direct Material Price Variance = Actual Material*(Actual Rate - Standard Rate)
Direct Material Quantity Variance = Standard Rate*(Actual Quantity - Standard Quantity for Actual Baths)
___________
Shampoo:
Direct Material Price Variance = 725*(558.25/725 - .70) = $50.75 (U)
Direct Material Quantity Variance = .70*(725 - 350*1.70) = 91 (U)
___________
Water:
Direct Material Price Variance = 6,500*(455/6,500 - .05) = 130 (U)
Direct Material Quantity Variance = .05*(6,500 - 350*15) = 62.50 (U)