Please use the following information for a company that makes and sell clocks fo

Question

Please use the following information for a company that makes and sell clocks for problems below::

The actual number of clocks to be produced and sold             2,000

The standard quantity of 3 pounds of material per unit

The standard price of $5 per pound

The standard quantity of 2 hours of direct labor per unit

The standard rate of $10 per direct labor hour

Actual results:

Direct materials cost       3.5 pounds of material per unit costing $4 per pound

Direct labor cost              1.5 hours of direct labor per unit costing $16 per direct labor hour

Please calculate the direct materials price and quantity variances?

Please calculate the direct labor rate and efficiency variances?

Explanation / Answer

Direct materials price variance = 2000*3.5*(4-5)= $7000 Favorable Direct materials quantity variance = 5*(2000*3.5-2000*3)= $5000 Unfavorable Direct labor rate variance=2000*1.5*(16-10)= $18000 Unfavorable Direct labor efficiency variance=10*(2000*1.5-2000*2)= $10000 Favorable

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