Chapter 10 -(formulas for the variances will be included on the final) 1. Direct

Question

Chapter 10 -(formulas for the variances will be included on the final) 1. Direct material Price Variance is (AQ AP) (AQ SP) or (AP SP)AQ. A developed the following per-unit standard for its product: direct materials at $3.10 per poum Last month, 5,000 pounds of d materials irect materials were actually purchased for $15,000. The direct price variance for last month was: Please show work. 2. Direct material Quantity Variance is (AQ SP) (SQ SP) or (AQ -SQ)SP. The per-unit standards for direct materials are 3 gallons at $5 per gallon. Last month, 16,000 gallons of direct materials was actually used to produce 5,000 units of product. The direct materials quantity variance for last month was: Please show work. 3. Use the following data to determine the Labor Rate Variance: Standard Direct Labor rate $25 2 hours Standard Direct Labor per unit Actual Direct Labor rate Actual Direct labor hours Actual units produced $26 2,250 hours 1,000 Labor Rate Variance Formula Labor Efficiency Variance Formula (AR-SRIAH (AH-SH)SR 4. Use the data above to determine the Labor Efficiency Variance

Explanation / Answer

1. Direct material price variance = (AP - SP) * AQ

Actual price (AP) = 15,000 / 5,000 = 3

Standard price (SP) = 3.1

Actual quantity (AQ) = 5,000

Direct material price variance = (3 - 3.1) * 5,000

= 500 Favourable.

2. Direct materials Quantity variance = (AQ - SQ) * SP

Actual quantity (AQ) = 16,000

Standard quantity (SQ) = 5,000 * 3 = 15,000

Standard price (SP) = 5

Direct materials quantity variance = (16,000 - 15,000) * 5

= 5,000 Unfavourable

3. Labour rate variance = (AR - SR) * AH

Actual rate (AR) = 26

Standard rate (SR) = 25

Actual hours (AH) = 2,250

Labour rate variance = (26 - 25) * 2,250

= 2,250 Unfavouravle.

4. Labour efficiency variance = (AH - SH) * SR

Actual hours (AH) = 2,250

Standard hours (SH) = 1,000 * 2 = 2,000

Standard rate (SR) = 25

Labour efficiency variance = (2,250 - 2,000) * 25

= 6,250 Unfavourable

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