Amber Company produces iron table and chair sets. During October, Amber\'s costs

Question

Amber Company produces iron table and chair sets. During October, Amber's costs were as follows $2.20 per lb $7.40 per hour $2.00 per lb Actual purchase price Actual direct labor rate Standard purchase price Standard quantity for sets produced Standard direct labor hours allowed Actual quantity purchased in October Actual direct labor hours Actual quantity used in October Direct labor rate variance 960,000 lbs. 10,000 1,105,000 lbs. 9,000 990,000 lbs. S5,400 F Required 1. Calculate the total cost of purchases for October otal Purchases 2. Compute the direct materials price variance based on quantity purchased. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.) Direct Materials Price Variance 3. Calculate the direct materials quantity variance based on quantity used. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.) Material Quantity Variance

Explanation / Answer

Standard Cost for Acual 1 Total Material Qty Purchased 1105000 Component Qty Rate Price Actual Purchase Price PU 2.20 Direct Material 960000 2.00 1920000 Total Purchases 2431000 Direct Labor 10000 8.00 80000 Total 2000000 2 Material Price Variance: (Actual QuantityPurchased) (Standard Price-Actual Price)Actual Qty Purchased Actual Cost (2.00-2.20)*1105000 Component Qty Rate Price -221000 UF Direct Material 990000 2.20 2178000 Direct Labor 9000 7.40 66600 3 Material Qty Variance: (Actual Qty Consumed) Total 2244600 (Standard Qty-Actual Qty consumed)Standard Price (960000-990000)*2.00 -60000 UF 4 Labor Price Variance: 5400 (Standard Price-Actual Price)Actual Hours 5400 (SP-7.40)*9000 5400 9000SP-66600 5400 9000SP 72000 Standard Price for Labor 8.00 5 Labor Eff Variance: (Standard Hours-Actual Hours)Standard Price (10000-9000)*8.00 8000 F

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