The following direct materials and direct labor data pertain to the operations o

Question

The following direct materials and direct labor data pertain to the operations of Laurel Company for the month of August. Costs Actual labor rate Actual materials price Standard labor rate Standard materials price $13 per hour $128 per ton $12.50 per hour $130 per ton Quantities Actual hours incurred and used Actual quantity of materials purchased and used Standard hours used Standard quantity of materials used 4,150 hours 1,220 tons 4,300 hours 1,200 tons (a) Compute the total, price, and quantity variances for materials and labor. Total materials variance Materials price variance A A A A Materials quantity variance Total labor variance

Explanation / Answer

Answer:

Calculation of various variances:

Total Material variance = ( SP X SQ) - (AP X SQ)

= 130 X 1200 - 128 X 1220

= 156,000 - 156,160

= (160)

Material price variance = (SP - AP) X AQ

= (130 - 128) X 1220

= 2,440.

Material quantity variance =(SQ - AQ) X SP

= (1200 - 1220) X 130

= (2,600)

Total labour variance= (SR X SH ) - (AR X AH)

= 12.50 X 4300 - 13 X 4150

53,750 - 53,950

= (200)

Labour price variance = (SR - AR) X AH

=( 12.50 -13) X 4150

= ( 2075)

Labor quantity variance= (SH - AH) X SR

=(4300 - 4150) X 12.50

=150 X 12.50

=1,875.

SP = standard material price

AP = Actual material price

SQ = standard quantity

AQ = Actual Quantity

SR= Standard labor rate per hour

AR= Actual labor rate per hour

SH= Standard hours used

AH= Actual hours used

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