D) $640 21) Fine Lumber Inc. mills and finishes furniture kits. A certain kit re

Question

D) $640 21) Fine Lumber Inc. mills and finishes furniture kits. A certain kit requires the following Direct materials standard Direct manufacturing labor standard 1.5 hours at $20.00 per hour 2 square yards at $13.50 per yard During the third quarter, the company made 1,500 kits and used 3,150 square yards of wood costing $42,600. Direct labor totaled 2,100 hours for $46,150. Required: a. Compute the direct materials price and efficiency variances for the quarter. b. Compute the direct manufacturing labor price and efficiency variances for the quarter

Explanation / Answer

a. Direct Material Price Variance = $ ( 13.50 x 3,150) - $ 42,600 = $ 75 U

Direct Materials Efficiency Variance = ( 2 x 1,500 - 3,150) x $ 13.50 = $ 2,025 U

b. Direct manufacturing labor price variance = $ 20 x 2,100 - $ 46,150 = $ 4,150 U

Direct manufacturing labor efficiency variance = ( 1.5 x 1,500 - 2,100) x $ 20.00 = $ 3,000 F

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