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: a. 12,100 pounds of material were purchased at a cost of $2.50 per pound. b. All of the material purchased was used to produce 1,500 units of Zoom. c. 575 hours of direct labor time were recorded at a total labor cost of $5,750. Required: 1. Compute the materials price and quantity variances for the month. 2. Compute the labor rate and efficiency variances for the month.

Explanation / Answer

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                  8.0000              5,400.00                  575.00                    10.00              5,750.00 Actual output              1,500.00 Materials reqd(1500*7.40)            11,100.00 Labour hrs reqd(1500*.45)                  675.00 DMPV = (SP-AP)*AQ DMPV = (2.60 - 2.50)12,100 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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