Exercise 10-6 Direct Materials and Direct Labor Veriances [L0101, L010-2] Quanti

Question

Exercise 10-6 Direct Materials and Direct Labor Veriances [L0101, L010-2] Quantity or Standard Price S or Rate 7.50 0.80 hours $ 7.00 per hour 5.60 Cost s $ 2.40 per pounds$18.00 Direct labor 13,250 pounds of material were purchased at a cost of $2.20 per pound a. b. c. All of the material purchased 1,000 hours of direct labor time were recorded at a total labor cost of $9,000. was used to produce 1,500 units of Zoom. Required 1. Compu te the materials price and q s 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).) Direct materials quantity variance

Explanation / Answer

Direct material price variance = ( Standard Price - Actual Price ) * Actual Quantity

= ( 2.40-2.20) * 13250 i.e 2650 Favourable

Direct Material Qunatity Variance = ( Stanadard qunatity - Actual Quantity ) * Standard price

= ( 11250-13250) *2.40 i.e 4800 Unfavourable

Direct labor rate variance = ( Standard Rate - Actual Rate ) * Actual Hours

= ( 7 - 9) *1000 i.e 2000 unfavourable

Direct labor efficiency variance = ( Standard hours - Actual hours ) * Standard Rate

= ( 1200-1000) * 7 i.e 1400 favourable

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