Bravo Baking uses standard costing to analyze its performance. The data below is

Question

Bravo Baking uses standard costing to analyze its performance. The data below is provided for your use in determining Bravo's

Material cost (ingredients) ( .5 lbs): Cost/unit = $2.29, Amount/unit = .5 lbs, Standard cost = $4.58
Direct labor: Cost/unit $2.25, Amount/unit .25 hrs, Standard cost $9

During the month, Bravo sold 9000 loaves of bread and used 4650 pounds of ingredients. Also during the month, Bravo purchased 5000 pounds of ingredients at a cost of $22,500. Employes worked a total of 2200 hours and actual labor cost were $19,998

Compute the following

Material price variance
Material quantity variance
Labor rate variance
Labor efficiency variance

Explanation / Answer

Material price variance

materials price variance =[Materials Price Variance = (Actual quantity purchased × Actual price) - (Actual quantity purchased × Standard price)]

MPV= (5000*22500/5000) - (5000*4.58) = -$400 = $400U

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Material quantity variance

Materials quantity variance =[Materials quantity variance = (Actual quantity used × Standard price) - (Standard quantity allowed × Standard Price)]

MQV = (5000*4.58) - (9000*0.5*4.58) = $2,290U

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Labor rate variance

Labor Rate Variance =[Labor rate variance = (Actual hours worked × Actual rate) - (Actual hours worked ×Standard rate)]

DLRV = (2200*19998/2200) - (2200*9) = $198U

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Labor efficiency variance

labor efficiency variance (LEV)=[Labor efficiency variance = (Actual hours worked × Standard rate) - (Standard hoursallowed × Standard rate)]

LEV = (2200*9) - ((9000*0.25)*9) = -450 = 450F

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