Sonne Company produces a perfume called Whim. The direct materials and direct la

Question

Sonne Company produces a perfume called Whim. The direct materials and direct labor standards for one bottle of Whim are given below: During the most recent month, the following activity was recorded: 22,260 ounces of material were purchased at a cost of $2.80 per ounce. The company produced only 2,300 bottles using 18,260 ounces of material. (The rest of the material purchased remained in raw materials inventory). 1,050 hours of direct labor time were recorded at a total labor cost of $13,230. Compute the direct material price and quantity variances for the month. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

Explanation / Answer

Direct Material Price Variance =Actual Quantity * Actual Price -Actual Quantity * Standard Price

Direct Material Quantity Variance =Actual quantity used * Standard cost per unit

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Standard quantity * Standard cost per unit

Actual Quantity= 18,260

Actual Price =2.80

Direct Material Price Variance =18,260 * 2.80 -18,260*2.90=-1826

Standard cost per unit =20.88

Direct Material Quantity Variance =18,260 * 20.88 -7.2 *20.88 =381118.64

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