Question

Corporation produces a single product. The standard cost card for the product follows:

Direct materials (4 yards $5 per yard) $20
Direct labor (1.5 hours $10 per hour) $15
Variable manufacturing overhead (1.5 hrs $4 per hour) $6
During the year, the company produced 8,840 units of product and incurred the following actual results:
Materials purchased, 56,100 yards at $2.10 per yard $117,810
Materials used in production (in yards) 36,450
Direct labor cost incurred, 18,000 hours at $8.20 per hour $147,600
Variable manufacturing overhead cost incurred $57,400
Fixed manufacturing overhead cost incurred $117,000
Ignore the variable manufacturing overhead data.
1. The materials price variance far the period is:_____.
A. $1,250 F.
B. $1,500 F.
C. $1,250 U.
D. $1,500 U.
2. The materials quantity variance for the period is:_____.
A. $950 U.
B. $5,000 F.
C. $1,000 U.
D. $6,000 F.
3. The labor rate variance for the period is:_____.
A. $3,150 U.
B. $2,700 F.
C. $2,700 U.
D. $3,150 F.
4. The labor efficiency variance for the period is:_____.
A. $3,000 U.
B. $2,550 U.
C. $2,550 F.
D. $3,000 F.

Answer 1

Results are below.

Step-by-step explanation:

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= (5 - 2.1)*56,100

Direct material price variance= $169,690 favorabe

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

Direct material quantity variance= (8,840*4 - 36,450)*5

Direct material quantity variance= $5,450 unfavorable

To calculate the direct labor efficiency and rate variance, we need to use the following formulas:

Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate

Direct labor time (efficiency) variance= (1.5*8,840 - 18,000)*10

Direct labor time (efficiency) variance= $47,400 unfavorable

Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity

Direct labor rate variance= (10 - 8.2)*18,000

Direct labor rate variance= $32,400 favorable