Question

The following direct materials and direct labor data pertain to the operations of Laurel Company for the month of August.

Answer 1

Answer:

Instructions are below.

Explanation:

Giving the following information:

Direct labor:

Actual labor rate $15 per hour

Standard labor rate $14.50 per hour

Actual hours incurred and used 3,500 hours

Standard hours used 3,550 hours

Direct material:

Actual quantity of materials purchased and used 1,500 tons

Standard quantity of materials used 1,480 tons

Actual materials price $220 per ton

Standard materials price $224 per ton

To calculate the direct labor efficiency and rate variance, we need to use the following formulas:

Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate

Direct labor time (efficiency) variance= (3,550 - 3,500)14.5

Direct labor time (efficiency) variance= $725 favorable

Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity

Direct labor rate variance= (14.5 - 15)*3,500

Direct labor rate variance= $1,750 unfavorable

To calculate the direct material rate and quantity variance, we need to use the following formulas:

Direct material price variance= (standard price - actual price)*actual quantity

Direct material price variance= (224 - 220)*1,500

Direct material price variance= $6,000 favorable

Direct material quantity variance= (standard quantity - actual quantity)*standard price

Direct material quantity variance= (1,480 - 1,500)*220

Direct material quantity variance= $4,400 unfavorable