Answer:
Direct Material quantity variances = $600 (Favorable)
Direct labor time variances = $279 (Unfavorable)
Explanation:
Requirement A,
We know,
Direct Material quantity variances = (Actual quantity - Standard quantity) × Standard cost per unit
Given,
<em>a) Standard cost per unit = $0.50 per pound</em>
b) Actual Quantity = Actual direct materials ÷ Standard cost per unit
Actual Quantity = $21,100 ÷ $0.50
<em>Actual Quantity = 42,200 pounds.</em>
c) Standard quantity = Actual production ÷ Standard cost per unit = 20,500 toys ÷ $0.50 per pound
<em>Standard quantity = 41,000 pounds</em>
Putting the values into the above formula,
Direct Material quantity variances = (41,000 - 42,200) pounds × $0.50 per pound
Direct Material quantity variances = $600 (Favorable)
As the standard quantity is higher than actual quantity, the company is in favorable condition.
Requirement B
We know,
Direct labor time variances = (Actual Hour - Standard Hour) × Standard labor rate per hour
Given,
<em>a) Standard labor rate per hour = $9.00</em>
b) Actual Hour = Actual direct labor ÷ standard direct labor rate
Actual Hour = $9,500 ÷ $9.00
<em>Actual Hour = 1,056 hours</em>
c) Standard hour = [(Standard Direct labor ÷ standard direct labor rate) ÷ Budgeted production] × Actual production
Standard hour = [($10,350 ÷ $9.00) ÷ 23,000] × 20,500
<em>Standard hour = 1,025 hours</em>
Putting the values into the above formula,
Direct labor time variances = (1,056 - 1,025) hours × $9.00
Direct labor time variances = $279 (Unfavorable)
As the standard hour is lower than actual hour, the company is in unfavorable condition.
