E9-4 Calculating Direct Materials and Direct Labor Variances [LO 9-3, 9-4] Suds
ID: 2514695 • Letter: E
Question
E9-4 Calculating Direct Materials and Direct Labor Variances [LO 9-3, 9-4]
Suds & Cuts is a local pet grooming shop owned by Collin Bark. Collin has prepared the following standard cost card for each dog bath given:
During the month of July, Collin’s employees gave 300 baths. The actual results were 700 ounces of shampoo used (cost of $182.00), 6,000 gallons of water used (cost of $420), and labor costs for 240 hours (cost of $2,448).
Required:
1. Calculate Suds & Cuts direct materials variances for both shampoo and water for the month of July. (Round your answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)
2. Calculate Suds & Cuts direct labor variances for the month of July. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable. Round your answers to nearest dollar amount.)
Standard Quantity Standard Rate Standard Unit Cost Shampoo 1.2 oz. $ 0.20 per oz. $ 0.24 Water 10 gal. $ 0.04 per gal. 0.40 Direct labor 0.8 hr. $ 9.00 per hr. 7.20Explanation / Answer
Requirement 1 a) For Shampoo Direct Material Price Variance = Actual Quantity X(Standard price-Actual Price) For Shampoo = 700 X (0.20-(182/700)) = 700 X (0.20-0.26) =$ 42 Unfavourable For Water = 6000 X(0.04-420/6000) = 6000 X(0.04-0.07) = $$180 unfavourable Direct Material Quantity Variance = Standard Price X (Standard Quantity -Actual Quantity) For Shampoo = 0.20 X ((300*1.2)-700) = 0.20 X (360-700) = 68 Unfavourable b) for Water = 0.04 X ((300*10)-6000) = 0.04 X (3000-6000) = 120 unfavourable Requirement 2 Direct Labour rate variance = Actual time x ( Standard rate -Actual rate) = 240X(9.00-(2448/240)) = 240X(9.00-10.20) = 288 Unfavourable Direct Labour Efficiency variance = Standard rate X ( Standard time -Actual time) = 9.00X((0.8X300)-240) = 9.00X(240-240) =0
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