Exercise 10-6 Direct Materials and Direct Labor Variances [LO10-1, LO10-2] Huron
ID: 2550576 • Letter: E
Question
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:
During the most recent month, the following activity was recorded:
11,000.00 pounds of material were purchased at a cost of $2.10 per pound.
All of the material purchased was used to produce 1,500 units of Zoom.
500 hours of direct labor time were recorded at a total labor cost of $6,500.
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.)
Standard Quantity or Hours Standard Priceor Rate Standard
Cost Direct materials 6.00 pounds $ 2.30 per pound $ 13.80 Direct labor 0.50 hours $ 10.00 per hour $ 5.00
Explanation / Answer
SQ 9000 6*1500 SP 2.3 AQ 11000 AP 2.1 Material Price Variance AQ*(SP-AP) 11000*(2.3-2.1) 11000*(0.2) 2200 Favourable Material Quantity Variance SP*(SQ -AQ) 2.3*(9000-11000) 2.3*(-2000) 4600 Unfavourable SH 750 1500*0.5 SR 10 AH 500 AR 13 6500/500 Labour Rate Variance AH*(SR-AR) 500*(10-13) 500*(-3) 1500 unfavourable Labour Efficiency Variance SR*(SH-AH) 10*(750-500) 2500 Favourable
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