Huron Company produces a commercial cleaning compound known as Zoom. The direct

Question

Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below: Standard Quantity or Hours Standard PriceStandard or Rate Cost Direct materials 5.3 pounds S 2.50 per pound$13.25 Direct labor 0.5 hours 5.50 per hourS 2.75 During the most recent month, the following activity was recorded a. Ten thousand two hundred pounds of material were purchased at a cost of $2.40 per pound. b. The company produced only 1,020 units, using 9180 pounds of material. (The rest of the material purchased remained in raw materia's inventory.) c. Six hundred and ten hours of direct labor time were recorded at a total labor cost of $7,320 Required: Compute the materials price and quantity variances for the month. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (.e, zero variance).) Direct materials price variance Direct materials quantity

Explanation / Answer

Material Price Variance = Actual Quantity of Material Purchased*(Actual Rate - Standard Rate) = 10200x(2.40-2.50) = - $ 1000 (f)  [the variance is favorable because the actual cost of material per unit is less than the standard cost of material per unit] Material Quantity Variance = Standard Rate*(Actual Quantity of Material Used in Production - Standard Quantity of Material Used in Production) = 2.50x(9180-5406) = $ 9435  [the variance is unfavorable because the actual quantity of material used to produce 2,000 units is higher than what was expected]

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