Question

During May, Joliet Fabrics Corporation manufactured 600 units of a special multilayer fabric with the trade name Stylex. The following information from the Stylex production department also pertains to May. Direct material purchased: 19,000 yards at $1.48 per yard $ 28,120 Direct material used: 10,500 yards at $1.48 per yard 15,540 Direct labor: 3,100 hours at $9.25 per hour 28,675 The standard prime costs for one unit of Stylex are as follows: Direct material: 20 yards at $1.45 per yard $ 29.00 Direct labor: 5 hours at $8.00 per hour 40.00 Total standard prime cost per unit of output $ 69.00. Required: Compute the following variances for the month of May.

Answer 1

Direct labour rate variance = (3875) unfavourable, Direct labour efficiency rate = (800) unfavourable

Explanation:

Computation of Direct Material Price & Quantity Variance

Direct Material Purchase - Price variance  = (SP minus AP) multiply AQ Purchase  ($1.45 minus $1.48) multiply19000  = ($570) Unfavourable

Direc Material Quantity Variance =(SQ-AQ)SP  =

((20 multiply600)-10500) multiply$1.45 =  $2,175 Favourable

Direct Material Price variance - (SP minus AP)AQ Used  = ($1.45minus $1.48) multiply10500 = ($315) Unfavourable

Computation of Direct Labour Rate & Efficiency Variance

Direct Labour Rate variance  = (SR minus AR)multiply AH  

= ($8 minus $9.25) multiply3100  = -3875 Un Favourable

Direct Labour Efficiency Variance  (SH minus AH)multiply SR  

= ((5 multiply 600) minus 3100)multiply8)  = -800 Un Favourable