E11-22A (similar to) Question Help Ine Acom Restaurant Group manutactures the ba

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E11-22A (similar to) Question Help Ine Acom Restaurant Group manutactures the bags ot trozen French tnes used at rts tranchised restaurants. Last week, Acorn's purchased and used 103,00 pounds ot potatoes at a price ot SD.rs per pound During the week, 2,500 direct labor hours were incurred in the plant at a rate of $12.05 per hour. The standard price per pound of potatoes is S0.90, and the standard direct labor rate is $11.80 per hour. Standards indicate thator the number of bags of frozen fries produced, the factory should have used 100,000 pournds of potatoes an 2,400 hours of dircct labor Read the fequirerments Requirement 1. Detemine the direct material price and quantity variances. Be sure to label each variance as favorable or unfavorable. (Entar the variances as positive numbers. Entar currency amounts to the nearest cent and your answers to the nearest whole dollar Label the variances as ravorable (FJor unfavorable (U) Abbreviations used DM = Dirod mdlcials ) Begin by determining the tormula tor the pnce vanance, then compute the price vanance or direct materias x ( DM price varisnce Requirements 1. Detemnedect material price and quantity variances Bc sure to label each vanance as tavorable or untavorable 2. Think of a plausible explanation for the variances found in Requirement 1 3. Detemane the direct lahor rate and efticiency variances Be sure to lahel each or unfavorabla variance as favorable or unfavorabla Could the explanahon tor the labor vanances be tied to the matenal vanances Explain. 4. Print Done

Explanation / Answer

Direct material usage variance can be due to labor inefficienty. It can be traced to labor efficiency negative variance as well.

*Hope the above explanation helps, please comment if further explanation is required. Your rating is appreciated*

Particulars Amount Amount Variance Nature Direct materials: Price variance: actual quantity used * ( standard rate - actual rate)        1,03,000 x ( 0.9 - 0.75) 15,450.00 F Quantity variance: Standard rate * ( standard quantity - actual quantity) 0.9 x (100000-103000) -2700 U Direct labor: Rate variance: Actual hours * (standard rate - actual rate) 2500 x (11.9-12.05) -375 U Efficienty variance: Standard rate * (standard hours - actual hours) 11.9 x (2400-2500) -1190 U

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