Final answer:
The question involves computing materials price and quantity variances as well as labor rate and efficiency variances for the Huron Company's production of Zoom. These are calculated using standard quantities, prices, and rates to identify differences in actual costs. The process is integral to managerial accounting cost control measures.
Step-by-step explanation:
The student's question pertains to variance analysis, an essential aspect of managerial accounting. Variance analysis is used to assess the differences between standard and actual costs, and it involves the calculation of materials price variance, materials quantity variance, labor rate variance, and labor efficiency variance.
Materials Price Variance:
This is calculated as (Actual Quantity Purchased × Actual Price) - (Actual Quantity Purchased × Standard Price). A positive variance indicates the company paid more for its materials than expected, while a negative variance means the materials cost less than what was budgeted.
Materials Quantity Variance:
This is calculated by (Standard Price × Actual Quantity Used) - (Standard Price × Standard Quantity Allowed). It shows whether the company used more or less material than the standard amount for the actual output.
Labor Rate Variance:
This is calculated as (Actual Hours Worked × Actual Rate) - (Actual Hours Worked × Standard Rate), indicating whether the labor wage rates paid were higher or lower than standard.
Labor Efficiency Variance:
This is calculated by (Standard Rate × Actual Hours) - (Standard Rate × Standard Hours Allowed). It reflects the efficiency of the labor force by showing whether more or fewer hours were worked than what was standard for the actual production.