.PART 2 Compute the labor rate and efficiency variances for the month. (Indicate
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Question
.PART 2
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).)
.PART 2
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: Standard Quantity or Standard Cost $19.24 3.60 Standard Price Hours 7.40 pounds $2.60 per pounds 0.45 hours 8.00 per hour or Rate Direct materials Direct labor During the most recent month, the following activity was recorded: a. 12,100 pounds of material were purchased at a cost of $2.50 per pound. b. All of the material purchased was used to produce 1,500 units of Zoomm. c. 575 hours of direct labor time were recorded at a total labor cost of $5,750 Required: 1. 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 varianceExplanation / Answer
1.Material Price Variance and Material Quantity variance
Material Price variance = Actual quantity(Standard price-Actual price) =12100(2.6-2.5)=$1210 F
Material Quantity variance = Std cost per unit( Std qty used-Actual qty used )=19.24(1500*7.4-12100) =$19240 U
2.Labour rate and Labour efficiency variances
Labour rate variance =Actual Hrs(Std rate - Actual rate) =575(3.6-0.45*$5750/575) =$517.5 U
Labour efficiency variance = Std rate(Std hrs- Actual Hrs) =3.6(5750/8 - 575)$517.5 F
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