Gates co reports the follwoing information regarding the production on one of it
ID: 2380796 • Letter: G
Question
Gates co reports the follwoing information regarding the production on one of its products for the month Compute the direct material cost variance, the direct material price variance quantity variance
direct material standerd (6 ibs@$3/Ib) $18 per finshed unit
Actual direct material used $179000 Ibs
Actual finished units produced 30000 units
actual cost of direct material used 554900
compute the direct labor cost variance , direct labor rate variance ,the direct labor efficincy variance
direct labor (2hrs@15/hrs) $30per finsh unit
Actual direct labor hours 60800 hrs
Actual finished units produced 30000 units
actual cost of direct labor 905920
Explanation / Answer
Materials price variance MPV = Actual Quantity Used*(Standard Price - Actual Price)
ie MPV = 179000*3 - 554900 = -17900 = $17,900 U
Materials quantity variance MQV = Standard Price*(Standard Quantity-Actual Quantity)
ie MQV = 3*(30000*6 - 179000) = $3000 F
Total direct materials cost variance = Materials quantity variance+Direct materials price variance = $3000F + $17900 U = $14,900 U
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