Sonne Company produces a perfume called Whim. The direct materials and direct la

Question

Sonne Company produces a perfume called Whim. The direct materials and direct labor standards for one bottle of Whim are given below:

Compute the direct materials price and quantity variances for the month. (Input all amounts as positive values. Do not round your per unit rates. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Compute the direct labor rate and efficiency variances for the month. (Input all amounts as positive values. Do not round your per unit rates. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Sonne Company produces a perfume called Whim. The direct materials and direct labor standards for one bottle of Whim are given below:

Explanation / Answer

Hi,

Please find the answers as follows:

Part A:

Direct materials price variance = Actual Quantity*(Actual Rate - Standard Rate) = 20000*(2.4 - 2.5) = 2000 (F)

Direct materials quantity variance = Standard Rate*(Actual Quantity - Standard Quantity) = 2.5*(20000 - 2500*7.2) = 5000 (U)

Part B:

Direct labor rate variance = Actual Hours*(Actual Rate - Standard Rate) = 900*(10800/900 - 10) = 1800 (U)

Direct labor efficiency variance = Standard Rate*(Actual Hours - Standard Hours) = 10*(900 - .4*2500) = 1000 (F)

Thanks.

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