Problem 4 (Supplemental Problem #1)-Compute materials and labor variances Zoller
ID: 2405098 • Letter: P
Question
Problem 4 (Supplemental Problem #1)-Compute materials and labor variances Zoller Company produces a dark chocolate candy bar. Recently, the company adopted the following standards for one bar of candy: Direct materials (6.3 oz. @ s0.20) Direct labor (0.08 hr.@ $18.00) Standard prime cost $ 1.26 1.44 270 During the first week of operation, the company experienced the following actual results: a. Bars produced: 143,000 b. Ounces of direct materials purchased: 901,200 ounces at $0.21 per ounce. c. There are no beginning or ending inventories of direct materials. d. Direct labor: 11,300 hours at $17.30 Required: (circle F or U to indicate whether the variance is favorable or unfavorable) 1. Compute the materials price variance:912 Compute the materials quantity usage variance:?4WD F ofD 2. - Compute the total materials variance: 4. Compute the labor rate variance:1110 5. Compute the labor efficiency variance: 2520 6. Compute the total labor variance: 3. F or U or U For U F or U You must show your work to receive credit***Explanation / Answer
Solution 1:
1. Material price variance = (AP – SP)AQ
Material price variance = ($0.21 – $0.20) x 901,200
Material price variance = $9,012 U
2. Material quantity Usage Variance = (AQ – SQ*)SP
Material quantity Usage Variance = (901,200 – 900,900)$0.20 = $60 U
*SQ = 143,000 × 6.3 = 900,900 oz.
3. Total material variance = Material price variance + Material quantity usage variance
Total material variance = $9,012 U + $60 U
Total material variance = $9,072 U
4. Labor rate variance = (AR – SR)AH
Labor Rate Variance = ($17.30 – $18.00)11,300
Labor rate variance = $7,910 F
5. Labor efficiency variance = (AH – SH*)SR
Labor efficiency variance = (11,300 – 11,440)$18.00
Labor efficiency variance = $2,520 F
6. Total labor variance =Labor rate variance + Labor efficiency variance
Total labor variance = $7,910 F + $2,520 F
Total labor variance = $10,430 F
Solution 2:
1. Material Price Variance = (AP – SP)AQ
Material Price Variance = ($2.50 – $2.60)274,000
Material Price Variance = $27,400 F
2.
Material quantity Usage Variance = (AQ – SQ)SP
Material quantity Usage Variance = (270,300 – 265,000*)$2.60
Material quantity Usage Variance = $13,780 U
*SQ = 5 × 53,000
3. Total material variance = Material price variance + Material quantity Usage Variance
Total material variance = $27,400 F + $13,780 U
Total material variance = $13,620 F
4. Labor rate variance = (AR – SR)AH
Labor rate variance = ($17.95 – $18.00)40,100
Labor rate variance= $2,005 F
5. Labor efficiency variance = (AH – SH)SR
Labor efficiency variance = (40,100 – 39,750*)$18.00
Labor efficiency variance = $6,300 U
*SH = 0.75 × 53,000
6. Total labor variance = Labor rate variance + Labor efficiency variance
Total labor variance = $2,005 F + $6,300 U
Total labor variance = $4,295 U
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