Levine Inc., which produces a single product, has prepared the following standar

ID: 2528863 • Letter: L

Question

Levine Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product.

During the month of April, the company manufactures 350 units and incurs the following actual costs.

Exercise 11-7

Levine Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product.

During the month of April, the company manufactures 350 units and incurs the following actual costs.

Compute the total, price, and quantity variances for materials and labor.

Direct materials (7 pounds at $1.60 per pound) $11.20 Direct labor (1 hours at $10.00 per hour) $10.00

a) Material price variance = (Standard price of DM - Actual price of DM) * actual qty used

= (11.2 - 10.3) * 2000

= $1,828.6 F

b) Material qty variance = (Std qty allowed - Actual qty used) * Standard price per unit

= ((350*7) - 2000) * 11.2

= $5040 F

c) Total material variance = DM price vairance+ DM qty variance

= 1828.6+5040

= $6,868.6 F

d) Labor price variance = (Std DL rate - actual DL rate) * Actual DL hours

= (10 - 10.46) * 370

= -$172.31 U

e) Labor qty variance = (Std DL hours allowed - actual DL hours used) * Std DL rate

= ((350*1) - 370) * 10

= -$200 U

f) Total labor variance = Labor qty + rate variance

= -200 - 172.31

= -$372.31 U

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