Question

Material and Labor Variances The following actual and standard cost data for direct material and direct labor relate to the production of 2,000 units of a product: Actual Costs Standard Costs Direct material 3,900 lbs. @ $5.30 4,000 lbs. @ $5.10 Direct labor 6,200 hrs. @ $8.40 6,000 hrs. @ $8.70 Determine the following variances: Do not use negative signs with any of your answers. Next to each variance answer, select either "F" for Favorable or "U" for Unfavorable. Materials Variances Actual cost: Answer Split cost: Answer Standard cost: Answer a. Materials price Answer Answer b. Materials efficiency Answer Answer Labor Variances Actual cost: Answer Split cost: Answer Standard cost: Answer c. Labor rate Answer Answer d. Labor efficieny Answer Answer

Answer 1

Answer:

Materials:

price     800U

quantity 510 F

Labor:

rate          1,860 F

efficiency 1,740 U

Explanation:

DIRECT MATERIALS VARIANCES

$(standard\:cost-actual\:cost) \times actual \: quantity= DM \: price \: variance$

std cost           $5.10

actual cost  $5.30

quantity          4,000

$(5.1 - 5.3) \times 4,000 = DM \: price \: variance$

price variance  $(800.00)

$(standard\:quantity-actual\:quantity) \times standard \: cost = DM \: quantity \: variance$

std quantity 4000.00

actual quantity 3900.00

std cost  $5.10

$(4,000 - 3,900) \times 5.1 = DM \: quantity \: variance$

quantity variance  $510.00

DIRECT LABOR VARIANCES

$(standard\:rate-actual\:rate) \times actual \: hours = DL \: rate \: variance$

std rate  $8.70

actual rate  $8.40

actual hours 6,200

$(8.7 - 8.4) \times 6,200 = DL \: rate \: variance$

rate variance  $1,860.00

$(standard\:hours-actual\:hours) \times standard \: rate = DL \: efficiency \: variance$

std  hours 6000.00

actual hours 6200.00

std rate  $8.70

$(6,000 - 6,200) \times 8.70 = DL \: efficiency \: variance$

efficiency variance  $(1,740.00)