Answer:
Results are below.
Explanation:
Giving the following information:
Standard:
Direct materials 6.80 pounds $ 3.00 per pound $ 20.40
Direct labor 0.50 hours $ 11.00 per hour $ 5.50
Actual:
22,900 pounds of material were purchased for $2.70 per pound. 1,400 hours of direct labor time were recorded at a total labor cost of $18,200.
Production= 3,000 units
<u>To calculate the direct material price and quantity variance, we need to use the following formulas:</u>
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Direct material price variance= (standard price - actual price)*actual quantity
Direct material price variance= (3 - 2.7)*22,900
Direct material price variance= $6,870 favorable
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Direct material quantity variance= (6.8*3,000 - 22,900)*3
Direct material quantity variance= $7,500 unfavorable
<u>To calculate the direct labor rate and efficiency variance, we need to use the following formulas:</u>
Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate
Direct labor time (efficiency) variance= (0.5*3,000 - 1,400)*11
Direct labor time (efficiency) variance= $1,100 favorable
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
Actual rate= 18,200/1,400= $13
Direct labor rate variance= (11 - 13)*1,400
Direct labor rate variance= $2,800 unfavorable
