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4 years ago

Calculate the material and labor variances.

Business

1 answer:

Mnenie [13.5K]4 years ago

5 0

Answer:

Direct material Price variance = $207,000 Favorable

Direct material quantity variance = -$72,500 Unfavorable

Direct labor Rate variance = -$7,350 Unfavorable

Direct efficiency variance = $5,880 Favorable

Explanation:

The computation of material and labor variances is shown below:-

Direct material Price variance = (Standard rate - actual rate) × Actual quantity

= ($1.45 - $1.30) × 1,380,000

= $0.15 × 1,380,000

= $207,000 Favorable

Direct material quantity variance = (Standard quantity - actual quantity) × standard rate

= ((190,000 × 7) - 1,380,000) × $1.45

= (1,330,000 - 1,380,000) × $1.45

= -50,000 × $1.45

= -$72,500 Unfavorable

Direct labor Rate variance = (Standard rate - Actual rate) × Actual hour

= ($14.00 - $15.50) × 4,900

= -$1.5 × 4,900

= -$7,350 Unfavorable

Direct efficiency variance = (Standard hours - actual hours) × Standard rate

= ((190,000 × 0.028) - 4,900) × $14.00

= (5,320 - 4,900) × $14.00

= 420 × $14.00

= $5,880 Favorable

The favorable variance is the variance in which the standard is more than the actual one and the unfavorable variance is the variance in which the standard is less than the actual one

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