Compute the direct materials price variance based on quantity purchased. (Indica
ID: 2465213 • Letter: C
Question
Compute the direct materials price variance based on quantity purchased. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)
Calculate the direct materials quantity variance based on quantity used. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)
Compute the standard direct labor rate for October. (Round your answer to 2 decimal places.)
Compute the direct labor efficiency variance for October. (Round your intermediate instruction 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)
Amber Company produces iron table and chair sets. During October, Amber’s costs were as follows:Explanation / Answer
1) Actual Purchase Price 1.9 per lbs Actual quantity purchased 1075000 lbs Total cost of purchases 2042500 2) Direct material price variance = ( Actual Price - Standard Price ) * Actual quantity Actual Purchase Price 1.9 per lbs Standard Purchase Price 1.7 per lbs Actual quantity purchased 1075000 lbs 215000 Direct material price variance = ( Actual Price - Standard Price ) * Actual quantity = ( 1.90 - 1.70 ) * 1075000 = 0.20 * 1075000 = 215000 U 3) Direct Material Quantity variance = ( Actual quantity - standard quantity) * standard price ` Actual quantity purchased 1075000 lbs Standatd quantity for sets produced 930000 lbs 145000 Standard Purchase Price 1.7 per lbs 246500 Direct Material Quantity variance = ( Actual quantity - standard quantity) * standard price = ( 1075000 - 930000) * 1.7 = 145000 * 1.7 = 246500 U 4) Direct labor rate variance = ( Actual rate - standard rate) * Actual hours Direct labor rate variance 5100 F Actual direct labor rate 7.1 per hour Actual direct labor hours 8000 Hence -5100 = ( 7.1 - standard labor rate) * 8000 Standard labor rate =7.1 + 5100/8000 = 7.1 + 0.6375 = 7.7375 5) Direct labor efficiency variance = ( Actual hours - Standard hours) * standard rate Actual direct labor hours 8000 Standard direct labor hours 15000 Standard labor rate 7.7375 54162.5 Direct labor efficiency variance = ( Actual hours - Standard hours) * standard rate = ( 8000 - 15000 ) * 7.7375 = -7000 * 7.7375 = 54162.5 F
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