Huron Company produces a commercial cleaning compound known as Zoom. The direct

Question

Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below:

During the most recent month, the following activity was recorded:

Eleven thousand two hundred pounds of material were purchased at a cost of $2.90 per pound.

The company produced only 1,120 units, using 10,080 pounds of material. (The rest of the material purchased remained in raw materials inventory.)

548 hours of direct labor time were recorded at a total labor cost of $6,576.

Required:

Compute the materials quantity variances for the month. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.)

Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using an elaborate distilling process. The company has developed standard costs for one unit of Fludex, as follows:

During November, the following activity was recorded related to the production of Fludex:

Materials purchased, 12,000 ounces at a cost of $198,000.

There was no beginning inventory of materials; however, at the end of the month, 3,200 ounces of material remained in ending inventory.

The company employs 20 lab technicians to work on the production of Fludex. During November, they each worked an average of 160 hours at an average pay rate of $12.00 per hour.

Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable manufacturing overhead costs during November totaled $4,800.

During November, the company produced 3,600 units of Fludex.

Required:

1. For direct materials Compute the price variances.

Standard Quantity or Hours Standard Price
or Rate Standard
Cost Direct materials 5.80 pounds $ 3.00 per pound $ 17.40 Direct labor 0.40 hours $ 8.00 per hour $ 3.20

Explanation / Answer

Ans 1: materials quantity variances= Standard Rate(Standard Quantity- Actual Quantity)

                                                             = 3x(1120x5.80-10080)= 10752(U)

Ans 2: direct material price variances.=Actual Quantityx((Standard Rate- Actual Rate)

                                                                      =12000*18-198000

                                                                    = 18000(F)

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