Exercise 23-8 The following direct materials and direct labor data pertain to th

Question

Exercise 23-8 The following direct materials and direct labor data pertain to the operations of Laurel Company for the month of August. sts Actual labor rate Actual materials price Standard labor rate Standard materials price $14 per hour 5267 per ton $13 per hour $269 per ton Actual hours incurred and used Actual quantity of materials purchased and used Standard hours used Standard quantity of materials used 4,223 hours 1,576 tons 4,272 hours 1,558 tons Compute the total, price, and quantity variances for materials and labor. Total materials variance. Materials price variance Materials quantity variance Total labor variance Labor price variance Labor quantity variance

Explanation / Answer

Material price variance = Actual quantity×Standard cost per unit-Actual cost

= 1,576×$269-1,576×$267

= $3,152 Favorable

Material quantity variance:

= Standard quantity×Standard cost per unit- Actual quantity×Standard cost per unit

= (1,558-1,576)×$269

= $4,842 Unfavorable

Total materials variance = Materials price variance+Materials quantity variance

= $3,152 Favorable+$4,842 Unfavorable

= $1,690 Unfavorable

Labor price variance:

= Actual hours×Standard rate- Actual labor paid

= 4,223×$13-4,223×$14

= $4,223 unfavorable

Labor quantity variance:

= Standard hours×Standard rate- Actual hours×Standard rate

= 4,272×$13-4,223×$13

= $637 Favorable

Total labor cost variance = Price variance+Quantity variance

= $4,223 unfavorable+$637 Favorable

= $3,586 Unfavorable

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