Problem 1: Etsy produces books. The standard cost of materials and labor are as
ID: 2405517 • Letter: P
Question
Problem 1: Etsy produces books. The standard cost of materials and labor are as follows: Standard Quantity or Hours Standard Price or Rate Direct materials Direct labor 12 pounds $8.25 per 4.0 hours $9.65 per hour During the year, the company posted the following: Actual output Raw materials purchased and used in production Actual cost of materials Raw direct labor used in production Actual direct labor rate 3,200 units 37,500 pounds $8.35 per pound 12,520 Hours $9.80 per hour Required: 25. Compute the materials quantity variance and indicate it as favorable or unfavorable 26. Compute the materials price variance and indicate it as favorable or unfavorable 27. Compute the materials spending variance and indicate it as favorable or unfavorable. 28. Compute the labor efficiency variance and indicate it as favorable or unfavorable 29. Compute the labor rate variance and indicate it as favorable or unfavorable 30. Compute the labor spending variance and indicate it as favorable or unfavorable. 16Explanation / Answer
25) Materials Quantity variance (Actual qty used - Standard qty allowed)*standard price (37500 - 3200*12)*8.25 7425 F 26) Materials price variance (Actual price - standard price)*Actual qty purchased (8.35 - 8.25)*37500 3750 U 27) Materials spending variance (actual cost - standard cost) (37500*8.35 - 3200*12*8.25) 3675 F 28) labor Efficiecny variance (Actual hours - standard hours)*Standard rate (12,520 - 3200*4)*9.65 2702 F 29) labor rate variance (actual rate - standard rate)*Actual hours (9.80 - 9.65)*12,520 1878 U 30) Labor spending variance (12520*9.80 - 3200*4*9.65) 824 F