QUESTION 19 ABC Company ABC Company reports the following information for the mo

Question

QUESTION 19 ABC Company ABC Company reports the following information for the most recent period Standard tual 7,000 pounds purchased $4.95 per pound 1,400 hours S7.95 per hour ost abor 1hour $8.00 per hour Refer to ABC Company. Calculate the direct materials price variance O $350 F O $350 U $7,150U QUESTION 20 ABC Company ABC Company reports the following information for the most recent period ost aterials abor Standard 1 lb. S5.00 1 hour@58.00 per hour ctual 000 pounds 1.400 hours S7.95 per hour Refer to ABC Company. Calculate the direct labor price variance O $70 F $200 U O $270 U O $130 U

Explanation / Answer

Question 19

The formula for direct material price variance is given by

(Standard price – Actual price) x Quantity.

Using this, we have

(5-4.95)*7000 = 350.

Since the actual price is lower than the standard price, it is a favorable variance. Hence the right answer is $350 F

Question 20

The formula for direct labor price variance is given by

(Standard rate – Actual rate) x Total Hours

Using this we have

(8-7.95)*1400 = 70

Since the actual price is lower than the standard price, the variance is favorable. Hence the right answer is $70 F

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