Exercise 10-6 Direct Materials and Direct Labor Variances [L010-1, LO10-2] Huron

Question

Exercise 10-6 Direct Materials and Direct Labor Variances [L010-1, LO10-2] 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 Standard Price Standard Hours or Rate Cost Direct materials Direct labor 7.30 pounds $2.25 per pound $16-43 4.22 0.65 hours $6.50 per hour During the most recent month, the following activity was recorded a. 16,600.00 pounds of material were purchased at a cost of $2.05 per pound. b. All of the material purchased was used to produce 2,000 units of Zoom. c. 1,200 hours of direct labor time were recorded at a total labor cost of $11,400. Required 1. Compute the materials price and quantity variances for the month. 2. Compute the labor rate and efficiency variances for the month. (For all requirements, Indicate the effect of each variance by selecting "F for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance), Input all amounts as positive values. Round your intermediate calculations to the nearest whole dollar) 1 Materials price variance Materials quantity variance 2. Labor rate variance Labor efficiency variance

Explanation / Answer

SQ Standard Quantity of Direct materials for actual production(Pounds) 14600 (2000*7.3) SH Standard Hours of Direct labor for actual production 1300 (2000*0.65) SP Standard Price per pound of direct materials $2.25 SR Standard Rate of direct labor per hour $6.50 AQ ActualQuantity of Direct materials for actual production(Pounds) 16600 AH Actual Hours of Direct labor for actual production 1200 AP Actual Price per pound of direct materials $2.05 AR Actual Rate of direct labor per hour $          9.50 (11400/1200) MPV=AQ*(SP-AP) Material Price variance $3,320 F Favourable MQV=SP*(SQ-AQ) Material Quantity Variance $        4,500 U Unfavourable LRV=AH*(SR-AR) Labor Rate Variance $        3,600 U Unfavourable LEV=SR*(SH-AH) Labor Efficiency Variance $           650 F Favourable

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.