Exercise 10-7 Direct Materials Variances [L010-1] Huron Company produces a comme
ID: 2432490 • Letter: E
Question
Exercise 10-7 Direct Materials Variances [L010-1] Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and unit of Zoom are given below: direct labor standards for one Standard Cost 5.40 pounds $3.00 per pound $16.20 2.40 0.40 hours $6.00 per hour During the most recent month, the following activity was recorded: a. Ten thousand four hundred pounds of material were purchased at a cost of $2.90 per pound. b. The company produced only 1,040 units, using 9,360 pounds of material. (The rest of the material purchased remained in raw materials inventory.) c. 516 hours of direct labor time were recorded at a total labor cost of $6,192. Required: 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). Input all amounts as positive values. Do not round intermediate calculations.) Materials price variance S 11,232Explanation / Answer
Direct Material
Standard Price (SP)
$3.00
Standard Quantity (SQ)
5,616
Actual Quantity (AQ)
9,360
Actual price (AP)
$2.90
Material purchased (MP)
10,000
Material Price Variance:
AQ
X
SP
Minus
AQ
X
AP
9,360
X
$3.00
Minus
9,360
X
$2.90
28,080
Minus
27,144
936
Favourable
Material Quantity Variance:
SQ
X
SP
Minus
AQ
X
SP
5,616
X
$3.00
Minus
9,360
X
$3.00
16,848
Minus
28,080
(11,232)
Unfavourable
Direct Material
Standard Price (SP)
$3.00
Standard Quantity (SQ)
5,616
Actual Quantity (AQ)
9,360
Actual price (AP)
$2.90
Material purchased (MP)
10,000
Material Price Variance:
AQ
X
SP
Minus
AQ
X
AP
9,360
X
$3.00
Minus
9,360
X
$2.90
28,080
Minus
27,144
936
Favourable
Material Quantity Variance:
SQ
X
SP
Minus
AQ
X
SP
5,616
X
$3.00
Minus
9,360
X
$3.00
16,848
Minus
28,080
(11,232)
Unfavourable
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