Direct labor: 7,780 direct labor-hours were worked at a cost of $59,128. Knope I

Question

Direct labor: 7,780 direct labor-hours were worked at a cost of $59,128.

Knope Incorporated invented a new canvas duffle bag called the Dufflemaster. Knope has a standard cost system and following are the standards for the Dufflemaster bag: Required: 1. Compute the following variances for July. (Do not round your per unit rates, round other intermediate calculations and your final answer to nearest whole dollar. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).): a. Direct materials price and quantity variances. Material price variance Material quantity variance b. Direct labor rate and efficiency variances. Labor rate variance Labor efficiency variance

Explanation / Answer

a) Direct material price variance = (0.34-0.32)*74000 = 1480 F

Direct material quantity variance = (5200*6-39000)*0.34 = 2652 U

b) Direct labour rate variance = (7.1*7780-59128) = 3890 U

Direct labour efficiency variance = (5200*1.4-7780)*7.1 = 3550 U

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