Material and Labor Variances The following actual and standard cost data for dir

Question

Material and Labor Variances The following actual and standard cost data for direct material and direct labor relate to the production of 2,000 units of a product: Actual Costs Standard Costs Direct material 8,400 lbs. $4.90 8,000 lbs.@ $5.20 Direct labor 11,400 hrs. $9.30 12,000 hrs. $9.50 Determine the following variances: Do not use negative signs with any of your answers. Next to each variance answer, select either "F" for Favorable or "U" for Unfavorable. Materials Variances Actual cost: Split cost: Standard cost: a. Materials price b. Materials efficiency

Explanation / Answer

Ans.1 MATERIAL VARIANCE: Actual cost   =   Actual quantity * Actual Price 8400 * 4.90 41160 Spilt cost       = Actual quantity * Standard Price 8400 * 5.20 43680 Standard cost = Standard quantity * Standard Price 8000 * 5.20 41600 a Material price variance   = (SP - AP) * AQ (5.20 - 4.90) * 8400 2520 Favorable b Material efficiency variance = (SQ - AQ) * SP (8400 - 8000) * 5.20 2080 Favorable Ans.2 LABOR VARIANCE: Actual cost   =   Actual hours * Actual Rate 11400 * 9.30 106020 Spilt cost       = Actual hours * Standard Rate 11400 * 9.50 108300 Standard cost = Standard hours * Standard Rate 12000 * 9.50 114000 a Labor rate variance   = (SR - AR) * AH (9.50 - 9.30) * 11400 2280 Favorable b Labor efficiency variance = (SH - AH) * SR (12000 - 11400) * 9.50 5700 Favorable

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