Direct materials ...standard quantity of hrs 4.6lbs...standard price $2.50 per p

Question

Direct materials ...standard quantity of hrs 4.6lbs...standard price $2.50 per pound...standard cost $11.50
direct labor...standard quanitity 0.2hrs...standard price $12 per hr...standard cost $2.40
a.twenty thousand lbs of material were purchased at a cost of $2.35 per pound.
b.All of the material purchased was used to produce 4,000 units of Zoom.
c.750 hrs of direct labor time were recorded at a total labor cost of $10,425

1.Compute the direct materials price and quantity variances for the month
2. COmpute the direct labor rate and efficiency variances for the month.

Explanation / Answer

1. Direct material price variance = actual quantity*(Actual price – standard price)

Direct material price variance = 20,000(2.35 – 2.50) = -3000, which is 3,000 favorable.

Direct material quantity variance = Standard price (Actual quantity – standard quantity)

Direct material quantity variance = 2.50(20,000 – 4.6*4,000) = 4,000, which is 4,000 unfavorable

2. Direct labor rate variance = actual hours*(actual rate – standard rate)

Direct labor rate variance = 750 (10,425/750 – 12) = 1425, which is 1425 unfavorable

Direct labor efficiency variance = Standard rate*(Actual hours – standard hours)

Direct labor efficiency variance = 12(750 – 0.2*4,000) = -600, which is 600 favorable

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