Nona Inc., which produces a single product, has prepared the following standard
ID: 2453917 • Letter: N
Question
Nona Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product. Direct materials (7 pounds at $2.90 per pound) $20.30 Direct labor (2 hours at $13.00 per hour) $26.00 During the month of April, the company manufactures 340 units and incurs the following actual costs. Direct materials purchased and used (1,800 pounds) $5,598 Direct labor (710 hours) $9,102 Compute the total, price, and quantity variances for materials and labor.
Total materials variance $ Materials price variance $ Materials quantity variance $ Total labor variance $ Labor price variance $Explanation / Answer
Total materials variance :
=(SQ x SP) - (AQ x AP) = Total Materials Variance
=(2380 x 2.9) - (5598)
=$6902 - $5598
=$1304 F
Material Price Variance:
= Materials price variance
=(AQ x SP) - (AQ x AP) = Material Price Variance
=($1800 X 2.9) - (5598)
=5220-5598
= $ 378 U
Materials quantity variance
=( SQ x SP) - (AQ x SP) = Materials Quantity Variance
=(2380 x 2.9) - (1800 x 2.9) =6902-5220=1682 F
Total labor variance:
Step 1: Calculate Actual hours
Actual Hours = 710 Hrs (Given)
Step 2: Calculate the standard cost of actual number of hours
Standard Cost of Actual Hours = Actual Hours x Standard Rate
= 710 hours (Step 1) x $13 per hour
= $9,230
Total direct labor variance = (SR x SH) – (AR x AH) = ($12.00 x 4,000) – ($13.00 x 3,600) = =( 13 x 680) – 9102 = 8840-9102=262 U
Labor price variance
labor price variance = (SRAH – ARAH)
= (13 X 710)-9102
=9,230-9102=128 F
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