Standard Cost Analysis The following direct materials and direct labor data pert

Question

Standard Cost Analysis The following direct materials and direct labor data pertain to the operations of Goddess Cher the Cat Manufacturing Company for the month of August. Costs Quantities Actual labor rate $14 per hour Actual hours incurred and used 4,120 hours Actual materials price $130 per ton Actual quantity of materials purchases and used 1,278 tons Standard labor rate $10 per hour Standard hours used 4,380 hours Standard materials price $132 per ton Standard quantity of materials used 1,180 tons Instructions Compute the total, price, and quantity variances for materials and labor and tell whether they are favorable or unfavorable. Total materials variance Materials price variance Materials quantity variance Total labor variance Labor price variance Labor quantity variance Standard Cost Analysis The following direct materials and direct labor data pertain to the operations of Goddess Cher the Cat Manufacturing Company for the month of August. Costs Quantities Actual labor rate $14 per hour Actual hours incurred and used 4,120 hours Actual materials price $130 per ton Actual quantity of materials purchases and used 1,278 tons Standard labor rate $10 per hour Standard hours used 4,380 hours Standard materials price $132 per ton Standard quantity of materials used 1,180 tons Instructions Compute the total, price, and quantity variances for materials and labor and tell whether they are favorable or unfavorable. Total materials variance Materials price variance Materials quantity variance Total labor variance Labor price variance Labor quantity variance

Explanation / Answer

Total Material variance   =    Standard cost - Actual cost

                                  = standard rate x standard quantity - actual rate x actual quantity

                                  = $132 per ton x 1180 tons - $130 per ton x 1278 tons

                                  = $155760 - $ 166140

                                  = $10380 U- unfavourable variance since actual cost is higher than standard cost.

Material price variance    = ( Standard rate - Actual rate ) x Actual quantity

                                     = ( $132-$130 ) x 1278 tons

                                     = $2 x 1278 tons

                                     = $2556 F- favourable variance since actual rate is less than standard rate.

Material quantity variance   = ( Standard quantity - Actual quantity ) x Standard price

                                         = (1180-1278) x $132 per ton

                                         = $12936 U-unfavarouble since actual quantity is higher than standard quantity.

Total Labor variance             =   Standard cost - Actual cost

                                          = Standard rate x standard hours - Actual rate x actual hours

                                          = $10 x 4380 hours - $14 x 4120 hours

                                          = $43800- $57680

                                           = $13880 U-unfavaourable since actual cost is higher than standard cost .

Labor rate variance      = ( Standard rate - Actual rate ) x Actual hours

                                        = ($10-$14) x 4120 hours

                                        = $4 x 4120 hours

                                        = $16480 -U-unfavorable since actual rate is higher than standard rate

Labor usage variance   = ( Standard hours - Actual hours ) x standard rate

                                          = ( 4380-4120) x $10 per hour

                                          = 260 hours x $10 per hour

                                           = $ 2600 -F-favourable since actual hours is less than standarad hours.

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