The following information pertains to the standard costs and actual activity for

Question

The following information pertains to the standard costs and actual activity for Tyler Company for September:

Direct materials 4 units of material A × $2.00 per unit 1 unit of material B × $3.00 per unitDirect labor3 hours × $8.00 per hourActivity for September Materials purchased Material A2,600 units × $2.05 per unitMaterial B700 units × $3.10 per unitMaterials used Material A2,250 unitsMaterial B605 unitsDirect labor used1,480 hours × $8.30 per hourProduction output500 units

(a) Determine the materials price and quantity variances.

(b) Determine the labor rate and efficiency variances.

Explanation / Answer

a.

1. Direct material price variance=(AQ×AP )-( SQ ×SP)

Material A price variance=(2250×2.05)-(2000×2)

=612.50 (U)

Material B price variance=(605×3.10)-(500×3)

=375.50(U)

2.

Direct quantity variance=(AQ ×SP)-(SQ ×SP)

Material A quantity variance=(2250×2)-(2000×2)

=450(U)

Material B quantity variance=(605×3)-(500×3)

=315(U)

b.

Direct labour rate variance=(AH ×AR )-( AH× SR)

=(1480×8.30)-(1480×8)

=444(U)

Direct labour efficiency variance=(AH ×SP)-(SH× SP)

=(1480×8)-(1500×8)

=160(F)

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