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. Ten thousand pounds of material were purchased at a cost of $2.90 per pound. b. The company produced only 1,000 units, using 8,000 pounds of material. (The rest of the material purchased remained in raw materials inventory.) c. Five hundred hours of direct labor time were recorded at a total labor cost of $6,000. Required: Compute the materials price and quantity variances for the month.

Explanation / Answer

Direct Material Price Variance:

= Actual Quantity x Actual Price - Actual Quantity x Standard Price

= Actual Cost - Standard Cost of Actual Quantity

Where:

= (8,000*2.90) – (8,000*3)

= -800 (U)

Direct Material Usage/Quantity Variance:

= Actual Quantity x Standard Price - Standard Quantity x Standard Price

Standard Cost of Actual Quantity - Standard Cost of Standard Quantity

= (Actual Quantity - Standard Quantity) x Standard Price

= [8,000-(1000*5.2)]*3

= -8400 (U)

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---

---

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