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: Standard Quantity or Standard Price Standard Hours 7.50 pounds S 2.40 per pounds 0.80 hours 7.00 per hour Cost $18.00 S 5.60 or Rate Direct materials Direct labor During the most recent month, the following activity was recorded: a. 13,250 pounds of material were purchased at a cost of $2.20 per pound. b. All of the material purchased was used to produce 1,500 units of Zoom. c. 1,000 hours of direct labor time were recorded at a total labor cost of $9,000 Required 1. Compute the materials price and 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).) Direct materials price variance Direct materials quantity variance 2. Compute the labor rate and efficiency variances for the month. (Indicate the offect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Do not round your intermediate calculations.) Direct labor rate variance Direct labor efficiency variance

Explanation / Answer

1) Material price variance = (2.40-2.20)*13250 = 2650 F

Material quantity variance = (1500*7.5-13250)*2.4 = 4800 U

2) Labour rate variance = (7*1000-9000) = 2000 U

Labour efficiency variance = (1500*.80-1000)*7 =1400 F

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