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 6.0 millilitres 0.5 hours Standard Cost $ 1.98 $6.00 Stand ard Price or Rate 0.33 per millilitre Direct materials Direct labour $ 12.00 per hour During the most recent month, the following activity was recorded a. 24,000 millilitres of material was purchased at a cost of $0.28 per millilitre b. All of the material was used to produce 3,000 bottles of Clean-Al c. 650 hours of direct labour time was recorded at a total labour cost of $7,800 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.., zero variance).) Materials price Materials quantity variance 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.., zero variance).) Labour rate variance Labour efficiency variance

Explanation / Answer

1.

2.

Material Price variance = Actual Quantity purchased* (Actual Price - Standard Price) Material Price variance = 24,000 * ($0.28-$0.33) Material Price variance = $1,200 F Material Quantity variance = Standard Price * (Actual Quantity used - Standard Quantity) Material Quantity variance = $0.33 * (24,000 - (3,000*6)) Material Quantity variance = $1,980 U

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