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 $ 3.00 per pound $10.00 per hour Standard Direct materials Direct labor 6.2 pounds 0.4 hours Cost $18.60 $4.00 During the most recent month, the following activity was recorded: a. Twelve thousand pounds of material were purchased at a cost of $2.90 per pound. b. The company produced only 1,200 units, using 10,800 pounds of material. (The rest of the material purchased remained in raw materials inventory.) c. Five hundred and eighty hours of direct labor time were recorded at a total labor cost of $6,960. 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 Direct materials quantity variance

Answer 1

Materials price variance $ 1080 Favorable Actual price is less than standard price

Material Quantity Variance=$ 10080 unfavorable actual quantity is more than standard quantity.

Step-by-step explanation:

Huron Company

Given

Standard Price or Rate $ 3.00 per pound

Standard hours rate $10.00 per hour

Standard Direct materials 6.2 pounds

Standard Quantity allowed for 1200 units = 1200*6.2= 7,440 pounds

Standard Cost material $18.60 Labor $4.00

Standard Direct labor 0.4 hours

Actual Price $ 2.90 per pound

Actual Quantity Used 10,800 pounds

Actual units Produced 1200

Actual hours used 584

Total Labor Cost $ 6960

Formula

1) Materials price variance = (Actual Price - Standard Price )* Actual Quantity

2)- Material Quantity Variance= (Standard Price) *( Actual Quantity- Standard Quantity)

Working

1) Materials price variance = (Actual Price - Standard Price )* Actual Quantity

Materials price variance = (2.90-3.0)* 10800= $ 1080 Favorable

2)- Material Quantity Variance= (Standard Price) *( Actual Quantity- Standard Quantity)

Material Quantity Variance=$3*(10800- 7440) = $3 * (3360)= $ 10080 Material Quantity Variance=$ 10080 unfavorable