Hutto Corp. has set the following standard direct materials and direct labor cos

Question

Hutto Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures. Direct materials (15 lbs. @ $4 per lb.) $60 Direct labor (3 hrs. @ $14 per hr.) 42 During May the company incurred the following actual costs to produce 8,700 units. Direct materials (132,900 lbs. @ $3.80 per lb.) $ 505,020 Direct labor (30,100 hrs. @ $14.10 per hr.). 424,410 Compute the direct materials price and quantity variances. Compute the direct labor rate variance and the direct labor efficiency variance. Indicate whether each variance is favorable or unfavorable.

Explanation / Answer

1 : Material price variance = ( Actual price - standard price ) × Actual quantity = (3.80-4) × 132,900 = $- 26,580 favorable

2. Material quantity variance = ( Actual quantity - standard quantity ) × Standard price = ( 132,900 - 130,500) × $4= $9600 unfavorable

3. Direct labour rate variance= ( Actual wage rate - standard wage rate ) × Actual total hours = ( 14.10 - 14)×30,100 = $3010 unfavorable

4. Direct labour efficiency variance = ( Actual total no of hrs - standard total hours ) ×standard wage rate = ( 30,100 - 26,100 ) × $14 per hour = $56,000 unfavorable

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.