6. Booker Corporation uses the following standards for 2012. 8 standards for 201

Question

6. Booker Corporation uses the following standards for 2012. 8 standards for 2012: (2.200 units were produc Direct materials: 13.200 pounds at $3 per pound ($39,600) Direct labor: 6.600 hours at $12 per hour ($79,200) Actual results for 2012 were as follows: 2.200 units of finished goods produced .2 Direct materials used: 12.000 pounds at a total cost of S33,000 ($2.75 per pound) Direct labor incurred: 5.500 hours at a total cost of $68,750 (S12.50 per hour) or unfavorable. Calculate the following variances for 2012. Label cach variance favorable a. Direct materials price variance b. Direct materials quantity variance c. Direct labor rate variance d. Direct labor time variance

Explanation / Answer

Answer a.

Actual Quantity = 12,000 pounds
Actual Rate = $2.75 per pound
Standard Rate = $3 per pound

Direct Materials Price Variance = Actual Quantity * (Actual Rate - Standard Rate)
Direct Materials Price Variance = 12,000 * ($2.75 - $3.00)
Direct Materials Price Variance = $3,000 Favorable

Answer b.

Actual Quantity = 12,000 pounds
Standard Quantity = 13,200 pounds
Standard Rate = $3 per pound

Direct Materials Quantity Variance = Standard Rate * (Actual Quantity - Standard Quantity)
Direct Materials Quantity Variance = $3.00 * (12,000 - 13,200)
Direct Materials Quantity Variance = $3,600 Favorable

Answer c.

Actual hours = 5,500
Actual Rate = $12.50 per hour
Standard Rate = $12.00 per hour

Direct Labor Rate Variance = Actual hours * (Actual Rate - Standard Rate)
Direct Labor Rate Variance = 5,500 * ($12.50 - $12.00)
Direct Labor Rate Variance = $2,750 Unfavorable

Answer d.

Standard Rate = $12.00 per hour
Actual hours = 5,500
Standard hours = 6,600

Direct Labor Time Variance = Standard Rate * (Actual hours - Standard hours)
Direct Labor Time Variance = $12.00 * (5,500 - 6,600)
Direct Labor Time Variance = $13,200 Favorable

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