Material price variance/material efficency variance/labor rate variance/labor ef
ID: 2501677 • Letter: M
Question
Material price variance/material efficency variance/labor rate variance/labor efficeny variance. Either favorable or unfavorable
Standard Costing Computations Adelphi Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 7.0 ounces $3.00 per ounce $14.00 per hour $21.00 $14.00 rect labor 1.0 hour The company reported the following results concerning this product in December. Originally budgeted output Actual output Raw materials used in production Actual direct labor-hours Purchases of raw materials Actual price of raw materials Actual direct labor rate 4,200 units 4,400 units 32,120 ounces 4,360 hours 35,400 ounces $2.80 per ounce $14.30 per hour The direct materials price variance is computed when the materials are purchased. Based on the above, calculate the four (material and labor) cost variances that we discussed under Standard C that we discussed under Standard Costing. Label cach variance as either favorable or unfavorable. Paragraph B 11Explanation / Answer
Material price variance = (SP - AP) A. qty
= (3 - 2.80)35400
= 7080 F
Material quantity variance = (SQ - AQ)SP
= (30800-32120)3
= 3960U
Labour rate variance = (SR - AR) A. hours
= (14 - 14.30)4360
= 1308 U
Labour efficiency variance = (S. Hrs - A.Hrs)xS.rate
= (4400-4360)14
= 560F