Exercise 8-13 Material and Labor Variances [LO4, LO5] Sonne Company produces a p

Question

Exercise 8-13 Material and Labor Variances [LO4, LO5]

Sonne Company produces a perfume called Whim. The direct materials and direct labor standards for one bottle of Whim are given below:

Compute the direct materials quantity and price variances for the month. (Input all amounts as positive values. Do not round your per unit rates, round other intermediate calculations and your final answer to nearest whole dollar. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

Compute the direct labor efficiency and rate variances for the month. (Input all amounts as positive values. Do not round your per unit rates, round other intermediate calculations and your final answer to nearest whole dollar. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

Sonne Company produces a perfume called Whim. The direct materials and direct labor standards for one bottle of Whim are given below:

Explanation / Answer

Hi,

Please find the detailed answer as follows:

Part A:

Direct Material Price Variance = Actual Quantity of Material Purchased *(Actual Rate - Standard Rate) = 19250*(2.40 - 2.60) = 3850 (Favorable)

Direct Material Quantity Variance = Standard Rate*(Actual Quantity - Standard Quantity Used for Actual Production) = 2.60*(19250 - 2500*6.90) = 5200 (Unfavorable)

Part B:

Labor Efficiency Variance = Standard Rate*(Actual Hours - Standard Hours Used for Actual Production) = 7*(450 - 2500*.30) = 2100 (Favorable)

Labor Rate Variance = Actual Hours*(Actual Rate - Standard Rate) = 450*(4500/450 - 7) = 1350 (Unfavorable)

Thanks.

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