C Not secure | ezto.mheducation.com/hm.tpx Question 6 (of 11) value: 3.00 points

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C Not secure | ezto.mheducation.com/hm.tpx Question 6 (of 11) value: 3.00 points Reed Corp has set the following standard direct materials and direct labor costs per unit for the product it manufactures Direct materials (15 lbs. @ $5 per lb.) $75 30 Direct labor (2 hrs. @ S15 per hr.) During June the company incurred the following actual costs to produce 8,600 units Direct materials (131,100 lbs.@ $4.80 per lb.) Direct labor (20,300 hrs. @ $15.10 per hr.). $629,280 306,530 (1) Compute the direct materials price and quantity variances tual Cost

Explanation / Answer

Solution:

1) Material variance

Actual Cost

Standard Cost

AQ

X

AP

AQ

X

SP

SQ

X

SP

131100

X

$4.80

131100

X

$5

129000

(8,600 Units x 15 lbs)

X

$5

$629,280

$655,500

$645,000

Direct materials price variance

$26,220

Direct material quantity variance

$10,500

Direct materials price variance (AQ*AP - AQ*SP)

$26,220

Favorable

Direct materials quantity variance (AQ*SP - SQ*SP)

$10,500

Unfavorable

Total direct materials variance

$15,720

Favorable

2) Direct labor variance

Actual Cost

Standard Cost

AH

X

AR

AH

X

SR

SH

X

SR

20300

X

$15.10

20300

X

$15

17200

(8600*2)

X

$15

$306,530

$304,500

$258,000

Direct materials price variance

$2,030

Direct material quantity variance

$46,500

Direct labor rate variance (AH*AR - AH*SR)

$2,030

Unfavorable

Direct labor efficiency variance (AH*SP - SH*SR)

$46,500

Unfavorable

Total direct labor variance

$48,530

Unfavorable

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Actual Cost

Standard Cost

AQ

X

AP

AQ

X

SP

SQ

X

SP

131100

X

$4.80

131100

X

$5

129000

(8,600 Units x 15 lbs)

X

$5

$629,280

$655,500

$645,000

Direct materials price variance

$26,220

Direct material quantity variance

$10,500

Direct materials price variance (AQ*AP - AQ*SP)

$26,220

Favorable

Direct materials quantity variance (AQ*SP - SQ*SP)

$10,500

Unfavorable

Total direct materials variance

$15,720

Favorable

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