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 Hours 6.50 pounds Standard Cost $12.35 $ 3.90 Standard Price or Rate Direct materials Direct labor $ 1.90 per pound S 13.00 per hour 0.30 hours During the most recent month, the following activity was recorded: a. 20,500 pounds of material were purchased at a cost of $1.70 per pound. b. All of the material purchased was used to produce 3,000 units of Zoom c. 800 hours of direct labor time were recorded at a total labor cost of $12,000 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

Explanation / Answer

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Direct Material Quantity variance = Standard Price * (Standard quantity - Actual Quantity) Direct Material Quantity variance = $1.90 * ((3,000*6.50)-20,500) Direct Material Quantity variance = $1,900 U Direct material Price variance = Actual Quantity * (Standard Price - Actual Price) Direct material Price variance = 20,500 * ($1.90 - $1.70) Direct material Price variance = $4,100 F

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