Problem #1 Amelia Quinn Company manufactures tables. A standard cost card for th

Question

Problem #1 Amelia Quinn Company manufactures tables. A standard cost card for the manufacture of one table shows the following: Standard Cost per Table: Direct material: 4 sq. ft. @ $3/sq. ft. Direct labor: 2 hours @ $8/hr Total prime costs $12 16 $28 In March, the company produced 1,000 tables. Actual production costs and quantities were: Direct material: 3,900 sq. ft. @ $3.10/sq. ft Direct labor: 2,300 hours @ $7.80/br $12 16 Required Calculate the price and quantity variances for direct material and direct labor

Explanation / Answer

a) Direct material variance :

Direct material price variance = (Standard price-actual price)actual quantity

                                                 = (3-3.10)*3900

Direct material price variance = 390 U

Direct material quantity variance = (Standard quantity-actual quantity)Standard price

                                                     = (1000*4-3900)*3

Direct material quantity variance = 300 F

b) Direct labour variance :

Direct labour rate variance = (Standard rate-actual rate)Actual hours

                                           = (8-7.80)2300

Direct labour rate variance = 460 F

Direct labour efficiency variance = (Standard hour-actual hour)Standard rate

                                                     = (1000*2-2300)*8

Direct labour efficiency variance = 2400 U

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