Chapter 11: Direct Material Variance Star Corporation reported the following sta
ID: 2581458 • Letter: C
Question
Chapter 11: Direct Material Variance
Star Corporation reported the following standards for direct material for the year:
Standard cost per gram $64.50/gram
Standard quantity per unit 8 grams per unit
In the past month, the company purchased 9,000 grams of material at a total cost of $577,800. A total of 8,600 grams were used to produce 1,000 units.
Calculate the direct material price variance and the direct material quantity variance. What is the total direct material variance?
Chapter 11: Direct Labor Variance
McNabb Corporation reports the following standards for direct labor for the year:
Standard cost per hour $17.75
Standard quantity per unit 2 hours
During the year, 35,000 finished goods were produced. The actual hours incurred to produce the finished units were 69,825 hours at a total cost of $1,256,850.
Calculate the direct labor rate variance and the direct labor efficiency variance. What is the total direct labor variance?
Explanation / Answer
Direct materials price variance = Actual quantity purchased * (Standard price - Actual price)
= 9,000 * [64.5 - (577,800 / 9,000)]
= 2,700 favourable
Direct material quantity variance = Standard price * (Standard quantity - Actual quantity)
= 64.5 * [(1,000 * 8) - 9,000]
= 64,500 unfavourable
Total direct material variance = (Actual quantity purchased * Actual price) - (Standard quantity * Standard price)
= 577,800 - (1,000 * 8 * 64.5)
= 61,800 unfavourable
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Direct labour rate variance = Actual hours * (Standard rate - Actual rate)
= 69,825 * [17.75 - (1,256,850 / 69,825)]
= 17,456.25 unfavourable
Direct labour efficiency variance = Standard rate * (Standard hours - Actual hours)
= 17.75 * [(35,000 * 2) - 69,825]
= 3,106.25 favourable
Total direct labour variance = (Actual hopurs * Actual rate) - (Standard hours * Standard rate)
= 1,256,850 - (35,000*2*17.75)
= 14,350 unfavourable
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