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 Standard Price or Rate Standard Quantity or Hours Cost Direct materials7.00 pounds $ 2.20 per pounds $15.40 0.45 hours 7.00 per hour 3.15 During the most recent month, the following activity was recorded: a. 19,500 pounds of material were purchased at a cost of $2.10 per pound. b. All of the material purchased was used to produce 2,500 units of Zoom. c. 1,025 hours of direct labor time were recorded at a total labor cost of $9,225. Required: 1. Compute the materials price and quantity variances for the month. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Direct materials price variance Direct materials quantity variance

Explanation / Answer

Material price variance = ( standard price - actual price) actual quantity

= (2.20 - 2.10 )19500

= $1950 F

Material Quantity variance = (Standard quantity - Actual quantity) * Standard price

= {(7*2500) - 19500} * 2.2

= 4400 U

Direct Labor rate variance = (standard rate per hr - actual rate per hr) * Actual Labor hrs

= {7 - (9925/1025) * 1025

= 2747 U

Direct labor efficiency variance = (standard hr - actual hrs) * standard rate per hr

= {(0.45*2500) - 1025} * 7

= $700 F

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