Orion Corporation has established the following standards for the prime costs of

Question

Orion Corporation has established the following standards for the prime costs of one unit of its chief product, dartboards.

During June, Orion purchased 395,000 pounds of direct material at a total cost of $782,100. The total wages for June were $417,252, 75 percent of which were for direct labor. Orion manufactured 29,000 dartboards during June, using 371,200 pounds of the direct material purchased in June and 31,610 direct-labor hours. Required: Compute the following variances for June. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance).)

Direct Material Price Variance:

Direct Material Quantity Variance:

Direct Material Purchase Price Variance:

Direct Labor Rate Variance:

Direct Labor Efficiency Variance:

Standard Quantity Standard Price or Rate Standard Cost Direct material 13.00 pounds $ 1.80 per pound $ 23.40 Direct labor 1.00 hour $ 13.00 per hour 13.00 Total $ 36.40

Explanation / Answer

1) Direct material Price Variance (Actual rate - standard rate)*Actual Qty used (1.98 - 1.80)*371200 66816 U 2) Direct Material Quantity variance (Actual qty used - standard qty allowed)*standard rate (371,200 - 29000*13)*1.80 10,440 F 3) Direct material purchase price variance 782,100   - 395000*1.8 71100 U 4) Direct labor rate variance (actual rate - standard rate)*actual hours (9.9 - 13)*31610 97991 F 5) Direct labor Efficiency variabnce (Actual hours - standard hours allowed)*standard rate (31,610 - 29000*1)*13 33930 U

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