Exercise 10-7 Direct Materials Variances [LO10-1] produces a commercial cleaning
ID: 2516059 • Letter: E
Question
Exercise 10-7 Direct Materials Variances [LO10-1] produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below Standard Quantity or Standard Price Standard Hours or Rate Cost Direct materials Direct labor 6.90 pounds $2.50 per pound $17.25 6.75 0.50 hours $13.50 per hour During the most recent month, the following activity was recorded es b. The company produced only 1,340 units, using 12,060 pounds of material. (The rest of the material purchased re materials inventory) c 770 hours of direct labor time were recorded at a total labor cost of S9.240. Required: Compute the materials price and quantity variances for the month. (Indicate the effect of each variance by sel favorable, "U" for unfavorable, and "None" for no effect (i.e., intermediate calculations ecting "F* for zero variance). Input all amounts as positive values. Do not round Materials price variance Materials quantity varianceExplanation / Answer
Materials price variance = Actual quantity purchased * (Actual price - Standard price)
= 13,400 * (2.4 - 2.5)
= 1,340 Favourable
Materials Quantity variance = Standard price * (Actual quantity used - Standard quantity)
= 2.5 * [12,060 - (1,340*6.9)]
= 2.5 * (12,060 - 9,246)
= 7,035 Unfavourable
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