Question

Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below: Standard Quantity or Hours Standard Price or Rate Standard Cost Direct materials 6.80 pounds $ 3.00 per pound $ 20.40 Direct labor 0.40 hours $ 13.00 per hour $ 5.20 During the most recent month, the following activity was recorded: Thirteen thousand two hundred pounds of material were purchased at a cost of $2.90 per pound. The company produced only 1,320 units, using 11,880 pounds of material.
Required:
1. Compute the materials price and quantity variances for the month.
2. Compute the labor rate and efficiency variances for the month.

Answer 1

Answer:

Instructions are below.

Explanation:

Giving the following information:

Direct material:

Standard Quantity= 6.8 pounds per unit

Standard cost= $3 per pound

Direct labor:

Standard hours= 0.40

Standard cost= $13 per hour

Direct material purchased= 13,200 punds

Direct material used= 11,880 pounds

Direct material cost= $2.90 per pound.

Production= 1,320 units

With the information provided, we can only calculate the direct material price and quantity variance. We don't have the actual direct labor hours and costs.

To calculate the direct material variances, we need to use the following formulas:

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

Direct material price variance= (3 - 2.9)*13,200= $1,320 favorable

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

Direct material quantity variance= (6.8*1,320 - 11,880)*3

Direct material quantity variance= (8,976 - 11,880)*3= $8,712 unfavorable