XYZ Company manufactures tables. A standard cost card for the manufacture of one
ID: 2515748 • Letter: X
Question
XYZ Company manufactures tables. A standard cost card for the manufacture of one table shows the following:
In November, the company produced 1,000 tables. Actual production took 2,300 direct labor hours and 3,900 square feet of lumber. The lumber cost $12,090 while the workers' average pay was $7,80 per hour.
Required:
Calculate the price and quantity variances for direct materials and the rate and efficiency variances for direct labor.
Standard Cost per Table Standard Cost per Table Standard Cost per Table Direct material: 4 sq. ft. @ $3 per sq. ft. $12 Direct labor: 2 hours @ $8 per hour $16 Total Prime Costs $28Explanation / Answer
Direct materials price variances = (Standard rate - actual rate) x Actual quantity
= {$3 - ($12,090 / 3,900)} x 3,900 = $390 Unfavorable
Direct quantity price variances = (Standard quantity - actual quantity) x Standard rate
= {(1,000 x 4) - 3,900} x $3 = $300 Favorable
Direct labor rate variances = (Standard rate - actual rate) x Actual hours
= ($8.00 - $7.80) x 2,300 = $460 Favorable
Direct labor efficiency variances = (Standard hours - actual hours) x Standard rate
= {(1,000 x 2) - 2,300) x $8 = $2,400 Unfavorable
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