Stumfoll Inc., which produces a single product, has prepared the follow standard
ID: 2496916 • Letter: S
Question
Stumfoll Inc., which produces a single product, has prepared the follow standard cost sheet for one unit of the product Direct materials: Standard Quantity: 6 pounds; Standard Price $2 per pound Direct labor: Standard Quantity: 2 hours; Standard Price: $12 per hour During the month of April, the company manufactures 250 units of the product. To make the 250 units of the product, the company used 1550 pounds of Direct Materials that it purchased at a cost of $2.10 per pound and it took 515 hours of Direct Labor at an hourly rate of $11.60. Instructions Compute the Cost and Efficiency variances for Direct Materials and Direct Labor. Indicate whether they were Favorable or Unfavorable. What are the total variances for Direct Materials and Direct Labor?Explanation / Answer
Answer:
Total material variance=(AQ*AP)-(SQ*SP)
=(1550*$2.10)-(1500*$2)
=$255 U
Material Price variance=(SP-AP)*AQ
=($2-$2.10)*1550=155 U
Material efficiency variance=(SQ-AQ)*SP
=(1500-1550)*$2
=$100 U
Total labor variance=(AH*AR)-(SH*SR)
=(515*$11.60)-(500*$12)
=$26 F
Labor rate variance=(SR-AR)*AH
=($12-$11.60)*515
=$206 F
Labor efficiency variance=(SH-AH)*SR
=(500-515)*$12
=$180 U