Answer:
Huron Company
1. Materials price variance = $6,870 F
Materials quantity variance = $7,500 U
2. Labor rate variance = $($2,800) U
Labor efficiency variance = $1,100 F
Explanation:
a) Data and Calculations:
Standard Quantity 6.80 pounds
Standard Price $ 3.00 per pound
Direct materials $20.40
Standard Rate $11.00 per hour
Standard hours 0.50 hours
Direct labor $ 5.50
a. Purchase of 22,900 pounds of materials at $2.70
b. Production units = 3,000
Actual quantity used 7.63 pounds (22,900/3,000)
Actual Price = $2.70
Actual material cost per unit = $20.61
c. Direct labor time = 1,400 hours at a total labor cost of $18,200
Actual rate per hour = $13 per hour ($18,200/1,400)
Actual hours = 0.47 hours
Actual direct labor cost per unit = $6.07
1. Materials price variance for the month = (Standard Price - Actual Price) * Actual Quantity of materials
= ($3 - $2.70) * 22,900
= $6,870 F
Quantity variance for the month = (Standard Qty - Actual Qty) * Standard Price
= (20,400 - 22,900) * $3
= -$7,500 U
2. Labor rate variance for the month = (Standard rate - Actual rate) * Actual labor hours
= ($11.00 - $13.00) * 1,400
= -$2,800 U
Direct labor Efficiency variance for the month = (Standard hours - Actual hours) * Standard Rate
= (1,500 - 1,400) * $11
= $1,100
