Cyuct Direct Material $36 per unit $9 per pound Direct Labor $63 per unit Quanti
ID: 2583266 • Letter: C
Question
Cyuct Direct Material $36 per unit $9 per pound Direct Labor $63 per unit Quantity4 pounds per unit Hours3 hours per unit Rate= $21 per hour Actual costs incurred in the production of 2,000 units were as follows: Direct Material: $66,300 Direct Labor: $114,480 ($8.50 per pound) (S21.20 per hour) All materials purchased were used during the period. REQUIRED: Compute the direct material price and quantity variances and the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable Use computations or goalpost format to show variancesExplanation / Answer
Answer:-
Actual quantity = Actual cost/$8.50 per pound = $66300/$8.50 per pound =7800 pounds
Materail price variance = (Standard price – Actual price) * Actual quantity used
= ($9.00 per pound - $8.50 per pound)*7800 pounds used
= $3900 Favourable
Material Quantity variance = (Standard Quantity- Actual Quantity)*Standard price
=(8000 pounds – 7800 pounds)*$9.00 per pound
= $1800 Favourable
Where:-
Standard quantity = Pounds per units*Actual Production
=4.00 pounds per unit*2000 units
= 8000 pounds
Actual hours = Actual cost/$21.20 per hour = $114480/$21.20 per hour =5400 hours
Labor Rate variance = (Standard rate – Actual rate) * Actual payment hour
= ($21.00 per pound - $21.20 per pound)*5400 hours
= $1080 Unfavourable
Labor Efficiency variance = (Standard hours- Actual hours)*Standard rate per hour
=(6000 hours – 5400 hours)*$21.00 per hour
= $12600 Favourable
Where:-
Standard hours = Hours per units*Actual Production
=3.00 hours per unit*2000 units
= 6000 hours
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