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 6.50 pounds $ 1.90 per pound $ 12.35 Direct labor 0.30 hours $ 13.00 per hour $ 3.90 During the most recent month, the following activity was recorded: a.20,500.00 pounds of material were purchased at a cost of $1.70 per pound. b.All of the material purchased was used to produce 3,000 units of Zoom. c.800 hours of direct labor time were recorded at a total labor cost of $12,000. Required: 1. Compute the materials price and quantity variances for the month. 2. Compute the labor rate and efficiency variances for the month. (For all requirements, 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. Round your intermediate calculations to the nearest whole dollar.) Garrison 16e Rechecks 2017-10-19

Answer 1

1. Standard price  = 1900 U

2. Labour Efficiency Variance  = $1300 F

Explanation:

1)  Direct Material Price Variance = (Standard Price minus Actual Price) into Actual quantity

Here all the materials purchased has been used for production

Threfore,

Material Price Variance = (1.90 minus 1.70) into 20500 = $4100 F

Material Quanitity Variance

= (Standard Quantity for actual production minus Actual Quantity) into Standard price

= [6.50 into 3000 minus 20500] into 1.90

= [19500 minus 20500] into 1.90

= - 1000 into 1.90

= 1900 U

2)  Labour Rate variance

= (standard rate minus Actual rate) into Actual labour hour used

= [13 minus (12000 by 800)] into 800

= (13 minus 15) into 800

= - 1600

= $1600 U

Labour Efficiency Variance

= (Standard hours for actual production minus Actual hours) into Standard rate

= (0.30 into 3000 minus 800) into 13

= (900 minus 800) into 13

= $1300 F

U -> Unfavourable

F - > Favourable