Question

Levine Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product. Direct materials (6 pounds at $3.10 per pound) $18.60 Direct labor (4 hours at $10.00 per hour) $40.00 During the month of April, the company manufactures 190 units and incurs the following actual costs. Direct materials purchased and used (2,200 pounds) $7,260 Direct labor (770 hours) $7,623 Compute the total, price, and quantity variances for materials and labor. Total materials variance $enter a dollar amount select an option Materials price variance $enter a dollar amount select an option Materials quantity variance $enter a dollar amount select an option Total labor variance $enter a dollar amount select an option Labor price variance $enter a dollar amount select an option Labor quantity variance $enter a dollar amount select an option

Answer 1

standard rates:

Direct materials (6 pounds at $3.10 per pound) $18.60

SP = $3.10

SQ = 6 lbs

Direct labor (4 hours at $10.00 per hour) $40.00

SR = $10

SH = 4 hours

actual usage for 190 units:

Direct materials purchased and used (2,200 pounds) $7,260

AP = $3.30

AQ = 2,200 lbs

Direct labor (770 hours) $7,623

AR = $9.90

AH = 770 hours

Direct materials price variance = (AP – SP) x AQ = ($3.30 – $3.10) x 2,200 = $440 unfavorable

Direct materials quantity variance = SP x (AQ – SQ) = $3.10 x (2,200 – 1,140) = $3,286 unfavorable

Total direct materials variance = (AP x AQ) - (SP x SQ) = ($3.30 x 2,200) - ($3.10 x 1,140) = $3,726 unfavorable

Direct labor price variance = (AR – SR) x AH = ($9.90 – $10) x 770 = -$77 favorable

Direct labor quantity variance = SR x (AH – SH) = $10 x (770 – 760) = $100 unfavorable

Total direct labor variance = (AR x AH) - (SR x SH) = ($9.90 x 770) - ($10 x 760) = $23 unfavorable