Budgeted standards for each unit produced are .75 pounds of raw material at $2.9

ID: 2376010 • Letter: B

Question

Budgeted standards for each unit produced are .75 pounds of raw material at $2.90 per pound and 4.0 minutes of direct labor at $9.00 per hour.

Compute the direct materials price and quantity variances

Compute the direct labor rate and efficiency variances.

Also, please show work as I want to learn how to solve this and not just get the answers. Thank you!

Budgeted standards for each unit produced are .75 pounds of raw material at $2.90 per pound and 4.0 minutes of direct labor at $9.00 per hour.

(1)

Compute the direct materials price and quantity variances

(2)

Compute the direct labor rate and efficiency variances.

Also, please show work as I want to learn how to solve this and not just get the answers. Thank you!

Hi,

Please find the answers as follows:

Part A:

Direct materials price: = Actual Quantity*(Actual Rate - Standard Rate) = 26000*(2.80 - 2.90) = 2600 (F)

Part B:

Direct materials quantity= Standard Rate*(Actual Quantity - Standard Quantity) = 2.9*(26000 - 30000*.75) = 10150 (U)

Part C:

Direct labor rate = Actual Hours*(Actual Rate - Standard Rate) = 2800*(26600/2800 - 9) = 1400 (U)

Part D:

Direct labor efficiency = Standard Rate*(Actual Hours - Standard Hours) = 9*(2800 - 30000/15) = 7200 (U)

Notes:

Standard Quantity of Raw Materials = .75*30000 (Actual Units Produced) = 22500

Standard Hours are Calculated as follows:

4 minutes to produce 1 unit. Therefore, 15 units can be produced in an hour. Total actual units produced = 30000.

Total Standarad Hours = 30000/15 = 2000 Hours

Thanks.

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