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 Price or Rate Standard Quantity or Hours 6.0 millilitres Standar Cost $1.98 $6.00 Direct materials Direct labour $ 0.33 per millilitres $ 12.00 per hour 0.5 hours 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. The company produced only 2,000 bottles, using 20,000 millilitres of material. (The rest of the material purchased remained in raw materials inventory.) c. 650 hours of direct labour time was recorded at a total labour cost of $7,800. 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

Materials price variance = 24000*(0.28-0.33)= 1200 F Materials quantity variance = 0.33*(20000-2000*6)= 2640 U

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