n cth astandard direct materials and direct labor costs per unit for the product
ID: 2596740 • Letter: N
Question
n cth astandard direct materials and direct labor costs per unit for the product it manufactures Chegg Study Guided Solutions and Study Help | Chegg.com Direct materials (15 lbs. 5 per lb.) Direct labor (3 hrs. * $15 per hr.) $75 45 During June the company incurred the following actual costs to produce 8,800 units Direct materials (135,000 lbs. a $4.70 per lb.) Direct labor (30,700 hrs. $15.15 per hr. $634,500 465,105 AQ Actual Quantity SQ = Standard Quantity AP= Actual Price SP = Standard Price AH Actual Hours SH = Standard Hours AR Actual Rate SR = Standard Rate (1) Compute the direct materials price and quantity variances (2) Compute the direct labor rate variance and the direct labor efficiency variance. Indicate whether each variance is favorable or unfavorableExplanation / Answer
Solution – 1:
Standard rate of lbs = $5
Actual rate of lbs = $4.70
Standard Qty of lbs for 8800 Units = 8800*15 = 132000
Actual Qty of lbs consumed = 135000
Material Price Variance = (SR – AR) * AQ = (5 – 4.70) * 135000 = $40,500 (F)
Material Qty Variance = (SQ – AQ) * SR = (132000 – 135000) * 5 = $15,000 (U)
Solution – 2:
Standard rate of direct labour = $15/hour
Standard hours for actual production = 8800 * 3 = 26400 Hrs
Actual Direct labor hours = 30700 Hrs
Actual rate of direct labor = $15.15/Hr
Labor rate variance = (SR – AR) * AH = (15 – 15.15) * 30700 = $4605 (U)
Labor efficiency variance = (SH – AH) * SR = (26400 – 30700) * 15 = $64,500 (U)
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