Standard Quantity Standard Price Standard Rate Direct Materials 3 feet $5 per fo

Question

Standard Quantity Standard Price Standard Rate

Direct Materials 3 feet $5 per foot $15

     During March, the company purchased direct materials at a cost of $55,650, all of which were used in the production of 3,200 units of product. In addition, 4,900 hours of direct labor time were worked on the product during the month. The cost of this labor time was $36,750. The following variances have been computed for the month:

Materials quantity variance: $4500 U

Labor spending variance$1,650F  

  Labor efficiency variance$800U

How do I find the price variance and spending variance?

     During March, the company purchased direct materials at a cost of $55,650, all of which were used in the production of 3,200 units of product. In addition, 4,900 hours of direct labor time were worked on the product during the month. The cost of this labor time was $36,750. The following variances have been computed for the month:

Materials quantity variance: $4500 U

Labor spending variance$1,650F  

  Labor efficiency variance$800U

How do I find the price variance and spending variance?

Explanation / Answer

Std qty ft/unit Std Price $/Ft Std Price /unit Actual Units Actual cost Actual Qty /Hr /unit Total Qty /Hr Actual Price/ft Std qty for actual production Direct Material                        3                    5          15.00 3,200          55,650            3.28    10,500            5.30           9,600 Direct Labor          36,750            1.53      4,900                11           4,800 Material Qty Variance =Std Rate ( Actual Qty -Std Qty for Actual Prodcution) = 5(Actual qty-9600)= 4500U Actual qty-9600=900U Actual Qty = 10500 Material Price variance= Actual Qty ( Actual rate-Std rate ) =10500(5.30-5) =                3,150 U                4,500 U Material spending Variance = Actual cost- Std cost *Std qty for actual production                                                           = 55650 -9600*5           7,650 U Labor efficiency Var = Std Labor Rate( Actual labor Hrs-std labor hrsfor actual production)=800U or ,std labor rate (4900-std labor hr for actual prodn)=800U Labor Spending Variance = Actual Labor spending - Std labor Hr for actual prodn*Std labor rate =1650F or . 36750- std labor rate*std labor hr for actual prodn=1650F So, std labor rate*std labor hr for actual prodn=         38,400 Actual labor hr =4900 Labor efficiency Var = Std Labor Rate( Actual labor Hrs-std labor hrsfor actual production)=800U or ,std labor rate (4900-std labor hr for actual prodn)=800U or . 4900*std labor rate - std labor rate*std labor hr =800U or, 4900.std labor rate=38400-800 =             39,200 (as std labor rate*std labor hr for actual prodn=38400) Std labor rate =35900/4900 =             8.0000 per labor hr Std labor hr for actual production =38400/8                4,800 Hrs Labor Price variance= Std labor rate ( Atual Hrs-Std hrs for Actual Prodn)= =8(3900-4800)                7,200 F

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