Sonne Company produces a perfume called Whim. The direct materials and direct la

Question

Sonne Company produces a perfume called Whim. The direct materials and direct labor standards for one bottle of Whim are given below: During the most recent month, the following activity was recorded: a. 19,500 ounces of material were purchased at a cost of $2.10 per ounce. b. All of the material was used to produce 2,500 bottles of Whim. c. 1,025 hours of direct labor time were recorded at a total labor cost of $9,225. Required: 1. Compute the direct materials price and quantity variances for the month. Compute the direct labor rate and efficiency variances for the month.

Explanation / Answer

Material price variance = AQ [AP-SP]

                                    = 19500 [2.10 -2.2 ]

                                      = 19500 *- .1

                                       = -1950 F

Material quantity variance = SR [AQ-SQ ]

                                    = 2.2 [ 19500 - (2500* 7)]

                                    = 2.2 [19500 -17500]

                                   = 4400 U

2)Labor rate variance = AH [AR-SR]

                          = 9225 - [1025 *7]

                          = 9225- 7175

                         = 2050 U

Efficiency variance = SR [AH-SH]

                           = 7 [1025 - (2500 *.45)]

                             = 7 [1025 - 1125]

                               = - 700 F

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