Please help! Huron Company produces a commercial cleaning compound known as Zoom
ID: 2465724 • Letter: P
Question
Please help! 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: During the most recent month, the following activity was recorded: 22,900 pounds of material were purchased at a cost of $2.70 per pound. All of the material purchased was used to produce 3,000 units of Zoom. 1,400 hours of direct labor time were recorded at a total labor cost of $18,200. 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).) Compute the labor rate and efficiency 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). Do not round your intermediate calculations.)Explanation / Answer
1. Direct material price variance
=actual quantity×(actual price-standard price)
=22900×(2.70 - 3.00)
=6870(F)
2. Direct material quantity variance
=(actual usage - standard usage)×standard cost per unit
=(22900 - (3000×6.80))×3.00
=7500(U)
3. Direct labour rate variance
=actual cost-(actual quantity×standard rate)
=18200-(1400×11)
=2800(U)
4. Direct labour efficiency variance
= standard rate(actual hours-standard hours)
=11(1400-(3000×.50))
=1100(F)