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:

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).)

Compute the labor rate and efficiency 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).)

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:

Explanation / Answer

Standard Quantity or Hours Standard Price    Standard Actual or Rate     Cost    Units Direct Material Qty Qty/Uni Rate Std QTY FOR 2500 UNITS Direct Labor Hrs Direct Labor Hrs/unit Total Labor cost Actual labor rate Std labor for 2500 units   Direct materials 6.4 pounds $ 2.4 per pounds $ 15.36     2500     17,500.00           7.00           2.20    16,000.00       475.00           0.19    5,938.00         12.50       625.00   Direct labor 0.25 hours $ 11 per hour $ 2.75 1 Material Price Variance = Actual Qty( Actual rate-std Rate)= 17500(2.20-2.40)= 3500 F Material Qty Variance = Std rate ( Actual qty-Std qty for actual output)=2.40(17500-16000)= 3600 U 2 Labor Rate variance = Actual Labor Hrs (Actual rate-Std Rate)=475(12.50-11) = 713 U Labor Efficiency Variance= Std Labor Rate(Actual Hrs-Std Hrs for Actual output)=11(475-625) 1650 F

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