Sonne Company produces a perfume called Whim. The direct materials and direct la
ID: 2449358 • Letter: S
Question
Sonne Company produces a perfume called Whim. The direct materials and direct labor standards for one bottle of Whim are given below: During the most recent month, the following activity was recorded: 21,500 ounces of material were purchased at a cost of $2.10 per ounce. All of the material was used to produce 2,500 bottles of Whim. Two thousand hours of direct labor time were recorded at a total labor cost of $21,000. Compute the direct materials quantity and price variances for the month. (Input all amounts as positive values. Do not round your per unit rates, round other intermediate calculations and your final answer to nearest whole dollar. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Compute the direct labor efficiency and rate variances for the month. (Input all amounts as positive values. Do not round your per unit rates, round other intermediate calculations and your final answer to nearest whole dollar. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)Explanation / Answer
(1) Direct material qty variance = (Std qty allowed - actual qty) Std price
= ($7.40 *2500 - 21,500)2.30
= (18,500 - 21,500)2.30
= 6900(U)
(2) Direct material price variance = ( 2.30 - 2.10 )21,500
= 4300(F)
(3) Direct labor efficiency variance = (std hrs allowed - actual hrs )std rate
=(.90*2500 - 2000)8.50
= 2125(F)
(4) Direct labor rate variance = ($8.50 - $10.50) 2000
= 4000(U)
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