Standard cost system-materials and labor variances Job no. 811 involved the prod

Question

Standard cost system-materials and labor variances Job no. 811 involved the production of 200 units of product MF. The total standard and actual costs for materials and direct labor on this job are shown below: Direct materials: Standard: 520 pounds @$3.40 per pound Standard: $1,768 Actual: 540 pounds @ $3.45 per pound Actual: $1,863 Direct Labor: Standard: 220 hours @$10 per hour Standard: $2,200 Actual: 213 hours @11 per hour Actual: $2,343 Compute the following cost variances for job no. 811. Indicate whether each variance is favorable (F) or unfavorable (U). (a) Materials price variance: $___ (b) Materials quantity variance: $________________ (c) Labor rate variance: $________________ (d) Labor efficiency variance: $________________

Explanation / Answer

a) Materials price variance: (Standard price -Actual Price) Actual Qty = (3.40-3.45)*540 = $ 27 (U)

(b) Materials quantity variance: (Standard Qty - Actual Qty) Standard Price = (520 - 540)*3.40 = $68 (U)

(c) Labor rate variance: (Standard Rate -Actual Rate) Actual Hour = (10-11)*213 = $213 (U)

(d) Labor efficiency variance: (Standard Hour - Actual Hour) Standard Rate = (220-213)*10 = $ 70 (F)

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