Valport Valve Company manufactured 8,300 units during March of a control valve u
ID: 2448303 • Letter: V
Question
Valport Valve Company manufactured 8,300 units during March of a control valve used by milk processors in its Shreveport plant. Records indicated the following:
Valport Valve Company manufactured 8,300 units during March of a control valve used by milk processors in its Shreveport plant. Records indicated the following:
2. For the month of March, compute the following variances. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance).) a. Direct-material price variance b. Direct-material quantity variance c. Direct-material purchase price variance d. Direct-labor rate variance e. Direct-labor efficiency varianceExplanation / Answer
Direct Material Price Variance
= Actual Quantity (Standard Price – Actual Price)
= 23500 (3.50 – 3.60)
= 2,350 Unfavorable
Direct Material Quantity Variance
= Standard Price (Standard Quantity – Actual Quantity)
= 3.50 (3*8300 – 23500)
= 3.50 (24900 – 23500)
= 4,900 Favorable
Direct Material Purchase Price Variance
= Standard rate * Standard Quantity – Actual price * Actual Quantity
= (3.5 * 24900) – (3.60 * 23500)
= 87150 – 84600
= 2550 Favorable
Direct labor Rate Variance
= Actual Hour (Standard Rate – Actual Rate)
= 42300 (15.70 – 15.30)
= 16,920 Unfavorable
Direct Labor Efficiency Variance
= Standard Rate (Standard Hour – Actual Hour)
= 15.70 (41,500 – 42,300)
= 12,560 Favorable
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