Direct Materials and Direct Labor Variances At the beginning of June, Kimber Toy
ID: 2521347 • Letter: D
Question
Direct Materials and Direct Labor Variances
At the beginning of June, Kimber Toy Company budgeted 22,000 toy action figures to be manufactured in June at standard direct materials and direct labor costs as follows:
The standard materials price is $0.60 per pound. The standard direct labor rate is $15.00 per hour. At the end of June, the actual direct materials and direct labor costs were as follows:
There were no direct materials price or direct labor rate variances for June. In addition, assume no changes in the direct materials inventory balances in June. Kimber Toy Company actually produced 20,000 units during June.
Determine the direct materials quantity and direct labor time variances. Round your per unit computations to two decimal places, if required. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
Direct materials $46,200 Direct labor 23,100 Total $69,300Explanation / Answer
Answer
Standard
Cost
per pound
Pounds
Units budgeted
pounds per unit
Standard Qty (pounds) for 20000 units
Direct Material
$46,200
$0.6
77000 [46200/0.6]
22,000
3.5 [77000/22000]
70,000 pounds [3.5 x 20000 units]
Standard Cost = 70000 pounds x $0.6 = $42,000
Actual Cost (direct material) = 43,300
Direct Material Quantity Variance = Standard Cost – Actual Cost = 42000 – 43300 = $1300 UNFAVOURABLE.
Standard
Cost
per hour
Hours
Units Budgeted
Hours per unit
Standard Qty (hours) for 20000 units
Direct Labor
$23100
$15
1540 [23100 / 15]
22000
0.07 hours [1540 / 22000]
1400 hours [20000 x 0.07]
Standard Cost (labor) = 1400 hours x $15 = $21,000
Actual Cost (direct labor) = $21,600
Direct Labor Time Variance = Standard Cost – Actual Cost = 21000 – 21600 = $600 UNFAVOURABLE.
Standard
Cost
per pound
Pounds
Units budgeted
pounds per unit
Standard Qty (pounds) for 20000 units
Direct Material
$46,200
$0.6
77000 [46200/0.6]
22,000
3.5 [77000/22000]
70,000 pounds [3.5 x 20000 units]
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