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 Standard Cost $2.04 Direct labour 0.3 hours er hour $3.60 Direct materials 6.0 mililires $0.34 per millilitre 12.00 During the most recent month, the following activity was recorded a. 30,000 millilitres of material was purchased at a cost of $0.29 per millilitre b. All of the material was used to produce 3,000 bottles of Clean-All 775 hours of direct labour time was recorded at a total labour cost of C. $9,300 Required 1. 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 2. Compute the direct labour rate and efficiency 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).) Labour rate variance Labour efficiency variance

Explanation / Answer

1) Material price variance = (0.34-0.29)*30000 = 1500 F

Material quantity variance = (3000*6-30000)*0.34 = 4080 U

2) Labour rate variance = (12*775-9300) = None

Labour efficiency variance = (3000*.3-775)*12 = 1500 F

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