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 5.50 pounds $ 2.50 per pound $ 13.75
Direct labor 0.50 hours $ 6.50 per hour $ 3.25
During the most recent month, the following activity was recorded:
1. Ten thousand six hundred pounds of material were purchased at a cost of $2.40 per pound.
2. The company produced only 1,060 units, using 9,540 pounds of material. (The rest of the material purchased remained in raw materials inventory.)
3. 630 hours of direct labor time were recorded at a total labor cost of $7,560.
Required:
Compute the materials price and quantity variances for the month. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.)

Answer 1

Answer:

Instructions are below.

Explanation:

Giving the following information:

Direct materials 5.50 pounds $ 2.50 per pound.

Actual:

1. 10,600 were purchased for $2.40 per pound.

2. The company produced only 1,060 units, using 9,540 pounds of material.

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

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

Direct material price variance= (2.5 - 2.4)*10,600

Direct material price variance= $1,060 favorable

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

standard quantity= 1,060*5.5= 5,830

Direct material quantity variance= (5,830 - 9,540)*2.5

Direct material quantity variance= $9,275 unfavorable