The following direct materials and direct labor data pertain to the operations o
ID: 2405849 • Letter: T
Question
The following direct materials and direct labor data pertain to the operations of Marigold Company for the month of August. Costs Actual labor rate Actual materials price Standard labor rate Standard materials price $13 per hour $130 per ton 12.50 per hour $133 per ton Actual hours incurred and used Actual quantity of materials purchased and used Standard hours used Standard quantity of materials used 4,000 hours 1,900 tons 4,080 hours 1,880 tons Compute the total, price, and quantity variances for materials and labor Total materials variance Matenials price variance Materials quantity variance Total labor variance Labor price vanance Labor quantity varianceExplanation / Answer
Total Material Variances $3040 Favourable
Material Price Variances $5700 Favourable
Material Quantity Variance $2660 Adverse
Total Labor Variance $1000 Adverse
Labor Price Variance $2000 Adverse
Labor Quantity Variance $1000 Favourable
Workings:
Total Material Variances= Standard Price x Standard Quantity – Actual Price x Actual Quantity
$133*1880-$130*1900=$250040-$247000=$3040 Favourable .
Material Price Variances= (Standard Price-Actual Price) x Actual Quantity
($133-$130)*1900=$5700 Favourable
Material Quantity Variance= Standard Price x (Standard quantity-Actual Quantity)
$133*(1880-1900)=$133*(-)20=$2660 Adverse.
Total Labor Variance= (Standard rate x Standard Hours) – (Actual rate x Actual hours )
=$12.50*4080-13*4000=51000-52000=$1000 Adverse
Labor Price Variance= (Standard Rate-Actual Rate)x Actual Hours worked
=($12.50-$13)*4000=$2000 Adverse
Labor Quantity Variance= Standard Rate x (Standard Hours – Actual Hours)
=$12.50*(4080-4000)=$1000 Favourable
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