Huron Company produces a commercial cleaning compound known as Zoom. The direct
ID: 2588932 • Letter: H
Question
Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below:
Compute the materials price and quantity variances for the month. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)
Direct materials price variance
Direct materials quantity variance
Compute the labor rate and efficiency variances for the month. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)
Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below:
Explanation / Answer
1)Direct material variance:
a) Direct material price variance:
Direct material price variance = (actual quantity*actual price )-(actual quantity * standard price)
= (20,000*2.35)-(20,000*2.50)
= $47,000-50,000
= $3000(F)
Direct material price variance =$300(F)
b) Direct material quantity variance
Direct material quantity variance=(actual quantity *standard price)-(standard quantity*standard price)
= (20,000*2.5)-((400*4.6)*2.5)
=$50,000-46,000
=$4,000(U)
Direct material quantity variance =$4,000(U)
2)Direct labour variance
a) Direct labour rate variance
Direct labour rate variance =(actual hours*actual rate)-(standard hours*standard rate)
= $10,425-(750*12)
= $10,425-$9,000
= $1,425(U)
Direct labour rate variance =$1,425(U)
b)Direct labour efficiency variance
Direct labour efficiency variance = (actual hours*standard rate)-(standard hours*standard rate)
= (750*12)-((4000*0.2)*12)
= $9,000-$9,600
= $600(F)
Direct labour efficiency variance=$600(F)
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