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 During the most recent month, the following activity was recorded: 12,100 pounds of material were purchased at a cost of dollar 2.50 per pound. All of the material purchased was used to produce 1,500 units of Zoom. 575 hours of direct labor time were recorded at a total labor cost of dollar 5,750. Required: 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).)

Explanation / Answer

Particulars Standard Actual Qty Rate amount Qty Rate amount Materials            11,100.00                      2.60            28,860.00            12,100.00                      2.50            30,250.00 Labour                  675.00                      8.00              5,400.00                  575.00                    10.00              5,750.00 Actual output              1,500.00 Materials (1500*7.40)            11,100.00 Labour hrs reqd(1500*.45)                  675.00 DMPV = (SP-AP)*AQ DMPV = (2.60-2.50)12100 DMPV = 1,210 F DMQV= (SQ-AQ)SP DMQV= (11,100-12,100)2.60 DMQV= 2,600 U DLRV= (SR-AR)AH DLRV= (8-10)575 DLRV= 1,150 U DLEV = (SH-AH)SR DLEV = (675-575)8 DLEV =800 F

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