Suds & Cuts is a local pet grooming shop owned by Collin Bark. Collin has prepar

Question

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 360 baths. The actual results were 730 ounces of shampoo used (cost of $131.40), 6,600 gallons of water used (cost of $528), and labor costs for 300 hours (cost of $3,480).

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 Unit Cost Standard S 0.18 Shamp00 WWaicor Direct labor 1.8 oz. S 0.10 per oz 16 gal. $ 0.05 per gal 1.1 hr. $10.00 per hr 0.80 11.00

Explanation / Answer

Solution 1:

Shampoo:

Standard quantity for actual production = 360 * 1.80 = 648 ounce

Standard price of shampoo = $0.10 per ounce

Actual quantity of material consumed = 730 ounce

Actual price of material = $131.40 / 730 = $0.18 per ounce

Material price variance = (SP - AP) * AQ = ($0.10 - $0.18) * 730 = $58.40 U

Material quantity variance = (SQ - AQ) * SR = (648 - 730) * $0.10 = $8.20 U

Water:

Standard quantity for actual production = 360 * 16 = 5760 gallon

Standard price of water = $0.05 per gallon

Actual quantity of material consumed = 6600 gallon

Actual price of material = $528 / 6600 = $0.08 per gallon

Material price variance = (SP - AP) * AQ = ($0.05 - $0.08) * 6600 = $198 U

Material quantity variance = (SQ - AQ) * SR = (5760 - 6600) * $0.05 = $42 U

Solution 2:

Standard hours of labor = 360 *1.10 = 396 hours

Standard rate of direct labor = $10 per hour

Actual hours of direct labor = 300 hours

Acutal rate of labor = $3,480 / 300 = $11.60 per hour

Direct labor rate variance = (SR - AR) * AH = ($10 - $11.60) * 300 = $480 U

Direct labor efficiency variance = (SH - AH) * SR = (396 - 300) * $10 = $960 F

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