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:

During the most recent month, the following activity was recorded:

Twenty thousand pounds of material were purchased at a cost of $2.35 per pound.

The company produced only 3,000 units, using 14,750 pounds of material. (The rest of the material purchased remained in raw materials inventory.)

750 hours of direct labor time were recorded at a total labor cost of $14,925.

Required:

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). Input all amounts as positive values.)

Standard Quantity or Hours Standard Price
or Rate Standard
Cost Direct materials 4.6 pounds $ 2.50 per pound $ 11.50 Direct labor 0.2 hours $ 18.00 per hour $ 2.40

Explanation / Answer

Material price variance = (Standard price-actual price)Actual quantity

                                      = (2.50-2.35)*20000

Material price variance = 3000 F

Material quantity variance = (Standard quantity-actual quantity)Standard rate

                                           = (3000*4.6-14750)*2.50

Material quantity variance = 2375 U

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