Answer: Materials price variance= $5,550 ----F - Favourable
Materials quantity variance=$4,250-U- Unfavourable
Labor Rate Variance= $2,400- U=Unfavorable
Labor Efficiency Variance=$2,800 =F Favourable
Explanation:
Standard Quantity Standard Price Standard Cost
or Hours or Rate
Direct materials 6.40 pounds $ 1.70 per pound $ 10.88
D.irect labor 0.40 hours $ 14.00 per hour $ 5.60
18,500.00 pounds of material were purchased at a cost of $1.40 per pound. All of the material purchased was used to produce 2,500 units of Zoom. 800 hours of direct labor time were recorded at a total labor cost of $13,600
a Materials price variance =Actual Quantity of Material Purchased*(Actual Rate - Standard Rate)
=18,500 X ( 1.40 -1.70)= 18,500 X 0.3= $5,550 ----F - Favourable because the actual cost of material per unit is less than the standard cost of material per unit]
b Materials quantity variance=Standard Rate*(Actual Quantity of Material Used in Production - Standard Quantity of Material Used in Production)
Standard Quantity of Material Used in Production = Actual Units Produced*Standard Material Per Unit
=2500 x 6.40= 16,000pounds nof materials
Materials quantity variance=1.70 x (18,500 - 16,000) =$4,250-U- Unfavourable because the actual quantity of material used to produce 2,500 units is higher than what was expected as the standard
C)Labor Rate Variance = Actual Hours Used*(Actual Rate - Standard Rate)
Actual rate = Actual cost/ Actual time
= 13,600/800= $17
Labor Rate Variance= 800 x (17-14)= 800 x 3 = $2,400- U=Unfavorable because the actual labor hour rate is higher than the standard hour rate
D)Labor Efficiency Variance = Standard Rate*(Actual Hours Used in Production - Standard Hours Used in Production)
Standard Hours Used in Production = Actual Units Produced*Standard Hours Per Unit
2500 x 0.40=1000 hours
Labor Efficiency Variance= 14 x ( 800 -1000) 14 x 200= $2,800 =F Favourable because the actual hours used in production is less than the standard hours that could have been used to produce 2,500 units
