Quinton Company has set the following standards for one unit of product: Direct

Question

Quinton Company has set the following standards for one unit of product: Direct material Quantity: 760 pounds per unit Price per pound: $12.30 per pound Direct labor Quantity: 7.20 hours per unit Rate per hour: $22.30 per hour Actual costs incurred in the production of 2,800 units were as follows Direct material: $265,684 ($12.70 per pound) Direct labor: $451,478 ($21.80 per hour) All materials purchased were consumed during the period Required: Compute the following variances. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable and enter"0" for no effect (i.e., zero variance).) Select "None" 1. Direct-material price variance 2. Direct-material quantity variance 3. Direct-labor rate variance 4. Direct-labor efficiency variance

Explanation / Answer

Material price variance = (12.30-12.70)*20920 = 8368 U

Material usage variance = (2800*7.6-20920)*12.30 = 4428 F

Labour rate variance = (22.30-21.80)*20710 = 10355 F

Labour efficiency variance =(2800*7.2-20710)*22.30 = 12265 U

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