Question

Levine Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product. Direct materials (9 pounds at $1.90 per pound) $17.10 Direct labor (4 hours at $10.00 per hour) $40.00 During the month of April, the company manufactures 160 units and incurs the following actual costs. Direct materials purchased and used (2,100 pounds) $4,410 Direct labor (680 hours) $6,664 Compute the total, price, and quantity variances for materials and labor.

Answer 1

See below

Step-by-step explanation:

1. Total materials variance

= (Actual quantity - Actual price) - (Standard quantity × Standard price)

= $4,410 - [(160 × 9) × $1.9]

= $4,140 - $2,736

= $1,404 unfavorable

2. Materials price variance

= (Actual quantity × Actual price) - (Actual quantity × Standard price)

= $4,140 - (2,100 × $1.9)

= $4,140 - $3,990

= $150 unfavorable

3. Materials quantity variance

= (Actual quantity × Standard price) - (Standard quantity × Standard price)

= (2,100 × $1.9) - [(160 × 9) × $1.9]

= $3,990 - $2,736

= $1,254 unfavorable

4. Total labor variance

= (Actual hours × Actual rate) - (Standard hours - Standard rate)

= $6,664 - (160 × 4) × $10

= $6,664 - $6,400

= $264 unfavorable