Amber Company produces iron table and chair sets. During October, Amber’s costs
ID: 2446327 • Letter: A
Question
Amber Company produces iron table and chair sets. During October, Amber’s costs were as follows:
Compute the direct materials price variance based on quantity purchased. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)
Calculate the direct materials quantity variance based on quantity used. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)
Compute the standard direct labor rate for October. (Round your answer to 2 decimal places.)
Compute the direct labor efficiency variance for October. (Round your intermediate instruction 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)
Actual purchase price $ 1.40 per lb. Actual direct labor rate $ 6.60 per hour Standard purchase price $ 1.20 per lb. Standard quantity for sets produced 880,000 lbs. Standard direct labor hours allowed 15,000 Actual quantity purchased in October 1,025,000 lbs. Actual direct labor hours 8,000 Actual quantity used in October 910,000 lbs. Direct labor rate variance 4,600 FExplanation / Answer
1
Calculation of total cost of purchases for October:
Actual quantity purchased in October (A)
1,025,000
lbs.
Actual purchase price (B)
$ 1.40
per lb.
Total cost of purchases for October = (A*B)
$ 1,435,000
2
Calculation of direct materials price variance based on quantity purchased:
Direct materials price variance = (Actual Price - Standard Price)* Actual Quantity Purchased
= (1.40-1.20)*1025000
=
$ 205,000
U
3
Calculation of direct materials price variance based on quantity Used:
Direct materials price variance = (Actual Price - Standard Price)* Actual Quantity used
= (1.40-1.20)*910000
=
$ 182,000
U
4
Calculation of standard direct labor rate for October:
Given that :
Direct labor rate variance = 4600 F = -4600
Direct labor rate variance = (Actual Rate - Standard rate)* Actual Hours
Hence,
(6.60 - Standard rate)*8000 = -4600
(6.60 - Standard rate) = -4600/8000
6.60 - Standard rate = -0.575
Standard rate = 6.60 + 0.575 =
$ 7.175
Per Hour
5
Calculation of direct labor efficiency variance for October:
Direct labor efficiency variance = (Actual Hours - Standard hours )*Standard rate
= (8000-15000)*7.175
=
$ 50,225
F
1
Calculation of total cost of purchases for October:
Actual quantity purchased in October (A)
1,025,000
lbs.
Actual purchase price (B)
$ 1.40
per lb.
Total cost of purchases for October = (A*B)
$ 1,435,000
2
Calculation of direct materials price variance based on quantity purchased:
Direct materials price variance = (Actual Price - Standard Price)* Actual Quantity Purchased
= (1.40-1.20)*1025000
=
$ 205,000
U
3
Calculation of direct materials price variance based on quantity Used:
Direct materials price variance = (Actual Price - Standard Price)* Actual Quantity used
= (1.40-1.20)*910000
=
$ 182,000
U
4
Calculation of standard direct labor rate for October:
Given that :
Direct labor rate variance = 4600 F = -4600
Direct labor rate variance = (Actual Rate - Standard rate)* Actual Hours
Hence,
(6.60 - Standard rate)*8000 = -4600
(6.60 - Standard rate) = -4600/8000
6.60 - Standard rate = -0.575
Standard rate = 6.60 + 0.575 =
$ 7.175
Per Hour
5
Calculation of direct labor efficiency variance for October:
Direct labor efficiency variance = (Actual Hours - Standard hours )*Standard rate
= (8000-15000)*7.175
=
$ 50,225
F
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.