McCort Company employs a standard cost system in which direct materials inventor
ID: 2485026 • Letter: M
Question
McCort Company employs a standard cost system in which direct materials inventory is earned at standard cost. The company has established the following standards for the prime costs of one unit of product During April, the company purchased 330,000 pounds of direct material at a total cost of $4,686,000 The total factory wages for June were $3,200,000. of which 90% was for direct labor The company manufactured 25,000 units of product during April using 302,000 pounds of direct material and 64,000 direct labor hours. What is the direct material quantity variance for April? What is the price variance for the direct material acquired by the company during April? What is the direct labor efficiency variance for April?Explanation / Answer
Direct Material Quantity Variance = ( Standard Qty- Actual ty) Standard Price ( 25000*12-302000)*14 (300000-302000)*14 -2000 *14 ($28,000) Unfavourable Direct Material Price variance ( Standard Price- Actual Price)* Actual Qty Purchased (14-4686000/330000)*330000 (14-14.2)*330000 -0.2 *330000 $66,000 Unfavourable Direct labur Efficiency Variance ( Std Hours- Actual Hours) Standard Rate (25000*2.6-64000)*44 1000*44 $ 44000 Favourable