Gandolph Game Company has established the following standards for the prime cost

Question

Gandolph Game Company has established the following standards for the prime costs of one unit of its During September, Gandolph purchased 223,000 kilograms of direct material at a total cost of $588,720. The total wages for September were $241,428, 75 percent of which were for direct labor. Gandolph manufactured 22,000 dartboards during September, using 178,200 kilograms of the direct material purchased in September and 40,920 direct-labor hours. Required: Compute the following variances for September. (Do not round intermediate calculations. Indicate the effect of each variance by selecting Favorable or Unfavorable. Select ?None? and enter O for no effect (i.e., zero variance).) 1. Direct-material price variance 2. Direct-material quantity variance 3. Direct-material purchase price variance 4. Direct-labor rate variance 5. Direct-labor efficiency variance

Explanation / Answer

Standard Actual Direct materail quantity 9 (178200/22,00) 8.1 Direct material Price (22.5/9) 2.5 (558720/223000) 2.64 Direcl labour rate 5 (181071/40920) 4.425 (75 % of wages/ hours) Direct labour time 1.7 hr 40920/22000 1.86 Material quanity variance = standard rate (Standard quantity - actual quantity) 2.5(22,000*9)-(178200) 49500 F Material price variance = Actual quantity (Standard rate - actual rate) 178200(2.5-2.64) 24948 U Direct material purchase variance: Actual purchase cost - standard cost 588720 223000*2.5 588720 - 557500 1220 U Labour rate variance = Actual hour (Standard rate - actual rate) 40920(5-4.425) 23529 F Labour efficiency variance = standard rate (Standard hours - actual hours) 5(22000*1.7)-40920 5(37400-40920) 17600 U

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