The direct materials and direct labour standards for one bottle of Clean-All spr

Question

The direct materials and direct labour standards for one bottle of Clean-All spray cleaner are given below Standard Quantity or Hours Standard Price or Rate Standa Cost Direct materials Direct 7.0 mililitres $0.28 per $1.96 millilitres 12.00 0.4 hours per hour $4.80 labour During the most recent month, the following activity was recorded a. 21,500 millilitres of material was purchased at a cost of $0.23 per millilitre b. The company produced only 2,000 bottles, using 17,500 millilitres of material. (The rest of the material purchased remained in raw materials inventory.) 700 hours of direct labour time was recorded at a total labour cost of $8,400 Required Compute the direct materials price and quantity variances for the month. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).) Materials price variance Materials quantity variance

Explanation / Answer

Material price variance = (0.28-0.23)*21500 = 1075 F

Material quantity variance = (2000*7-17500)*0.28 = 980 U

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