Question

Direct Materials and Direct Labor Variances At the beginning of June, Bezco Toy Company budgeted 10,000 toy action figures to be manufactured in June at standard direct materials and direct labor costs as follows: Direct materials $10,500 Direct labor 4,800 Total $15,300 The standard materials price is $0.7 per pound. The standard direct labor rate is $12 per hour. At the end of June, the actual direct materials and direct labor costs were as follows: Actual direct materials $9,500 Actual direct labor 4,400 Total $13,900 There were no direct materials price or direct labor rate variances for June. In addition, assume no changes in the direct materials inventory balances in June. Bezco Toy Company actually produced 8,800 units during June. Determine the direct materials quantity and direct labor time variances. Round your per unit computations to two decimal places, if required. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Answer 1

Answer:

Direct material quantity variance = -$260 Unfavorable

Direct labor time variance = -$176 Unfavorable

Explanation:

The computation of the direct materials quantity and direct labor time variances is shown below:-

Direct material quantity variance = (Standard Direct material ÷ Company budgeted × Produced units) - Actual direct material

= ($10,500 ÷ 10,000 × 8,800) - $9,500

= ($1.05 × 8,800) - $9,500

= $9,240 - $9,500

= -$260 Unfavorable

Direct labor time variance = (Standard Direct labor ÷ Company budgeted × Produced units) - Actual direct labor

= ($4,800 ÷ 10,000 × 8,800) - $4,400

= $0.48 × 8,800) - $4,400

= $4,224 - $4,400

= -$176 Unfavorable

Therefore we have applied the above formula.