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 Rate Standard Unit Cost Shampoo 1.7 oz. $ 0.70 per oz. $ 1.19 Water 15 gal. $ 0.05 per gal. 0.75 Direct labor 1.05 hr. $ 10.00 per hr. 10.50 During the month of July, Collin’s employees gave 350 baths. The actual results were 725 ounces of shampoo used (cost of $558.25), 6,500 gallons of water used (cost of $455), and labor costs for 290 hours (cost of $3,306).

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.)

2. Calculate Suds & Cuts direct labor variances for the month of July. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)

Explanation / Answer

SHAMPOO

Standard Price = $0.70
Actual Price = $558.25/725 = $0.77
Standard Quantity = 1.7*350 = 595
Actual Quantity = 725

Material Price Variance = (Standard Price - Actual Price)*Actual Quantity
= (0.70 - 0.77)*725
= $5075 (U)

Material Quantity Variance = (Standard Quantity - Actual Quantity)*Standard Price
= (595 - 725)*0.70
= $91(U)

Material Spending Variance = Standard Price*Standard Quantity - Actual Price*Actual Quantity
= 0.70*595 -0.77*725
= $141.75 (U)

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