Question

Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below:



Standard Quantity or Hours Standard Price
or Rate Standard Cost
Direct materials 5.6 pounds $ 3.00 per pound $ 16.80
Direct labor 0.4 hours $ 7.00 per hour $ 2.80


During the most recent month, the following activity was recorded:
a. Ten thousand eight hundred pounds of material were purchased at a cost of $2.90 per pound.
b.
The company produced only 1,080 units, using 9,720 pounds of material. (The rest of the material purchased remained in raw materials inventory.)

c. Five hundred and thirty two hours of direct labor time were recorded at a total labor cost of $6,384.
Required:

Compute the materials price and quantity variances for the month. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Do not round intermediate calculations.)

Direct materials price variance F
Direct materials quantity variance U

Answer 1

Answer:

Instructions are below.

Explanation:

Giving the following information:

Standard:

Direct materials 5.6 pounds $ 3.00 per pound

Actual:

10,800 pounds were purchased at a cost of $2.90 per pound.

The company produced only 1,080 units, using 9,720 pounds of material.

To calculate the direct material price and quantity variance, we need to use the following formulas:

Direct material price variance= (standard price - actual price)*actual quantity

Direct material price variance= (3 - 2.9)*10,800

Direct material price variance= $1,080 favorable

Direct material quantity variance= (standard quantity - actual quantity)*standard price

Direct material quantity variance= (5.6*1,080 - 9,720)*3

Direct material quantity variance= $11,016 unfavorable