Question

Pharoah Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product. Direct materials (6 pounds at $1.60 per pound)$9.60 Direct labor (6 hours at $10.00 per hour)$60.00 During the month of April, the company manufactures 310 units and incurs the following actual costs. Direct materials purchased and used (2,400 pounds)$4,080 Direct labor (1,880 hours)$18,612 Compute the total, price, and quantity variances for materials and labor.

Answer 1

Materials

price variance = $240 Unfavorable

quantity variance = $864 Unfavorable

total variance = $1,104 Unfavorable

Labor

price variance = $188 Favorable

quantity variance = $200 Unfavorable

total variance = $12 Unfavorable

Step-by-step explanation:

Materials

price variance = (Aq × Ap) - (Aq × Sp)

= (2,400 × $1.70) - (2,400 × $1.60)

= $240 Unfavorable

quantity variance = (Aq × Sp) - (Sq × Sp)

= (2,400 × $1.60) - (310 × 6 × $1.60)

= $864 Unfavorable

total variance = price variance + quantity variance

= $240 + $864

= $1,104 Unfavorable

Labor

price variance = (Aq × Ap) - (Aq × Sp)

= (1,880 × $9.90) - (1,880 × $10.00)

= $188 Favorable

quantity variance = (Aq × Sp) - (Sq × Sp)

= (1,880 × $10.00) - (310 × 6 × $10.00)

= $200 Unfavorable

total variance = price variance + quantity variance

= $188 + (-$200)

= $12 Unfavorable