Suds & Cuts is a local pet grooming shop owned by Collin Bark. Collin has prepar

Question

Suds & Cuts is a local pet grooming shop owned by Collin Bark. Collin has prepared the following standard cost card for each dog bath given: Standard Quantity Standard Standard RateUnit Cost Shampoo Water Direct labor 1.3 oz. S 0.30 per oz. 11 gal. S0.04 per gal. 0.85 hr. $ 9.00 per hr. 0.39 0.44 7.65 During the month of July, Collin's employees gave 310 baths. The actual results were 705 ounces of shampoo used (cost of $232.65), 6,100 gallons of water used (cost of $427), and labor costs for 250 hours (cost of $2,600) Required: 1. Calculate Suds & Cuts direct materials variances for both shampoo and water for the month of July. (Round your answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.) Shampoo Water Direct Material Price Variance Direct Material Quantity Variance

Explanation / Answer

1. .(see working note 1 and 2 for details)

SHAMPOO

WATER

Direct Material Price Variance

$21.15

U

$ 183

U

Direct Material Quantity Variance

$ 90.6

U

$ 107.6

U

2. .(see working note 3 for details)

Direct Labour Rate Variance

$ 350

U

Direct Labour Efficiency Variance

$ 121.5

F

Working Notes:

1. Direct Material Price Variance( SHAMPOO)

=(Standard Price/unit-Actual Price/unit)* Actual Material Consumed

=($ 0.30/oz-$ 0.33/oz)* 705 ounces=$ 21.15 U

Direct Material Quantity Variance(SHAMPOO)

=( Standard Quantity of Materials used for actual output- Actual Quantity of Materials)*Standard Price/unit

=(403 ounces-705 ounces)*0.30/oz=$ 90.6 U

2. . Direct Material Price Variance( WATER )

=(Standard Price/unit-Actual Price/unit)* Actual Material Consumed

=($ 0.04/gal - $ 0.07/gal)*6100 gallons= $ 183 U

Direct Material Quantity Variance(WATER)

=( Standard Quantity of Materials used for actual output- Actual Quantity of Materials)*Standard Price/unit

=( 3410 gal- 6100 gal)* $0.04/gal= $ 107.6 U

3. Labour Rate Variance=( Standard Rate/hour-Actual Rate/hour)* Actual Hours

=( 9 /hour-$ 10.4/hour)*250 hours=$ 350 U

Labour Efficiency Variance=( Standard Hours-Actual Hours)* Standard Rate/hour

=( 263.5 hours-250 hours)* $ 9/hour=$ 121.5 F

SHAMPOO

WATER

Direct Material Price Variance

$21.15

U

$ 183

U

Direct Material Quantity Variance

$ 90.6

U

$ 107.6

U

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