3 Exercise 10-6 Direct Materials and Direct Labor Variances [LO10-1, LO10-2] Hur
ID: 2527774 • Letter: 3
Question
3 Exercise 10-6 Direct Materials and Direct Labor Variances [LO10-1, LO10-2] 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: points Standard Book Quantity or Standard Price Standard Hours or Rate Direct materials Direct labor 7-40 pounds $2.60 per pound 19.24 3.60 0.45 hours 8.00 per hour References During the most recent month, the following activity was recorded a. 12,100.00 pounds of material were purchased at a cost of $2.50 per pound. b. All of the material purchased was used to produce 1,500 units of Zoom c.575 hours of direct labor time were recorded at a total labor cost of $5,750. Required: 1. Compute the materials price and quantity variances for the month 2. Compute the labor rate and efficiency variances for the month. For all requirements, 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. Round your intermediate calculations to the nearest whole dollar.)Explanation / Answer
Answer:
1
Compute the direct materials price and quantity variances for the month.
1.a.Direct Material Price Variance
= (AQXAP)- (AQXSP)
= (12,100X$2.60)-(12,100X$2.50)
= $31500-32760
= 1,260 (F)
b.
Direct material Quantity variance
= (AQXSP)- (SQXSP)
= (12400X$2.5)-[(1500x7.5)X$2.6]
= $31500-29250
= 3510 (U)
Direct Material Price Variance
1260 F
Direct material Quantity variance
3510 U
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2
Compute the direct labor rate and efficiency variances for the month.
a.Direct labor rate variance
= (AHXAR)- (AHXSR)
= $5750 – (575X8)
=$5750-4600
=1,150 (U)
b. Direct labor efficiency variance
= (AHXSR)- (SHXSR)
= (575X8) – [(1500x 0.45)X8]
=4600-5400
=$800 (F)
Direct labor rate variance
1150 U
Direct labor efficiency variance
800 F
Direct Material Price Variance
1260 F
Direct material Quantity variance
3510 U
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