Answer:
Riggins, Inc.
a. Material price variance
= $450 F
b. Material quantity variance
= $750 U
c. Labor price variance
= $550 U
d. Labor quantity variance
= $7,000 F
Explanation:
a) Data and Calculations:
Selling price of tybo per unit = $8
Estimated production units in March = 9,500
Standard material and labor costs:
Particulars Standard Standard Standard
quantity price per unit
Direct materials 2.5 pounds $3 per pound $7.50
Direct labor 0.6 hours $10 per hour $6.00
Actual production units in March = 9,000
Actual materials and labor costs:
Actual results:
Purchase of materials, 24,000 pounds = $66,000
Production usage = 24,000 pounds
Total labor hours = 5,000
Total wage cost = $55,000
Particulars Actual Actual Actual Cost
quantity price per unit
Direct materials 2.67 pounds $2.79 per pound $7.45
Direct labor 0.555 hours $11 per hour $6.11
Material price variance = (Standard price - Actual price) * Actual quantity
= ($7.50 - $7.45) * 9,000
= $450 F
Material quantity variance = (Standard Qty - Actual Qty) * Standard Price
= (23,750 - 24,000) * $3
= $750 U
Labor price variance = (Standard price - Actual price) * Actual hours
= ($6.00 - $6.11) * 5,000
= $550 U
Labor quantity variance = (Standard Qty - Actual Qty) * Standard Price
= (5,700 - 5,000) * $10
= 700 * $10
= $7,000 F
