Accounting, 6e CALCULA Exercise 23-7 Levine Inc., which produces a single produc

Question

Accounting, 6e CALCULA Exercise 23-7 Levine Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product Direct materials (10 pounds at $3.60 per pound Direct labor (5 hours at $10.00 per hour) $36.00 $50.00 During the month of Aprit, the company manufactures 280 units and incurs the following actual costs Direct materials purchased and used (2,000 pounds) Direct labor (1,410 hours) $7,600 $13,959 Compute the total, price, and quantity varlances for materials and labor Total materials variance Materials price variance Materials quantity variances Total labor variance Labor price variance Labor quantity variance Question Attempts: o of S used SAVE FOR LATEA

Explanation / Answer

1. Total material variance = (standard cost-actual cost)

= (280*36-7600)

Total material variance = 2480 Favourable

2. Material price variancce = (standard price-actual price)actual quantity

= (3.6*2000-7600)

Material price variance = 400 Unfavourable

3. Material quantity variance = (standard quantity-actual quantity)standard price

= (280*10-2000)3.6

Material quantity variance = 2880 Favourable

4. Total labour variance = (standard cost-actual cost)

= (280*50-13959)

Total labour variance = 41 Favourable

5. Labour rate variance = (standard rate-actual rate)actual hours

= (10*1410-13959)

Labour rate variance = 141 Favourable

6 Labour efficiency variance = (standard hours-actual hours)standard rate

= (280*5-1410)10

Labour efficiency variance = 100 Unfavourable

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