Accounting Principles I1 - Study Guide for Exam 3 Chapter 10: Standard Costs and
ID: 2589218 • Letter: A
Question
Accounting Principles I1 - Study Guide for Exam 3 Chapter 10: Standard Costs and Variances Use the following information to answer questions 1 and 2: Turrubiates Corporation makes a product that uses a material with the following standards: Standard quantity Standard price Standard cost 7.5 liters per unit s 2.00 per liter $15.00 per unit The company budgeted for production of 3,300 units in April, but actual production was 3,400 units. The company used 26,200 liters of direct material to produce this output. The company purchased 19.600 liters of the direct material at $2.1 per liter. The direct materials price variance is computed when the materials are purchased. 1. The materials quantity variance for April is: A. $1,470 F B. $1,470 U C. $1,400 F D. $1.400 U P(AG-sa) 2. The materials price variance for April is: A. $1,960 F B. $1.960 U C. $2.620 F D. $2,620 U Use the following information to answer questions 3 and 4: The following labor standards have been established for a particular product: Standard labor-hours per unit of output Standard labor rate 9.0 hours $16.60 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked Actual total labor cost Actual output 9,600 hours $156,480 960 units 3. What is the labor rate variance for the month? A. $14,550 F B. S 2,880 F C. S17,115 U D. $14,550 U 4. What is the labor efficiency variance for the month? A. 15,648F B. 15,648 U. C. 15,936 F D. 15,936 U.Explanation / Answer
SOLUTION
(a) Material Quantity variance = $1,400 (U)
Material Quantity variance = (Actual quantity - Standard quantity) * Standard price
= [26,200 - (3,400*7.5)] * $2
= (26,200 - 25,500) * $2
= 1,400 (U)
(b) Material Price Variance = $1,960 (U)
Material Price Variance = (Actual price - Standard price) * Actual quantity
= ($2.10 - $2.00) * 19,600
= $1,960 (U)