Standard Cost Analysis The following direct materials and direct labor data pert

Question

Standard Cost Analysis

The following direct materials and direct labor data pertain to the operations of Goddess Cher the Cat Manufacturing Company for the month of August.

Instructions

Compute the total, price, and quantity variances for materials and labor and tell whether they are favorable or unfavorable.

Total materials variance

Materials price variance

Materials quantity variance

Total labor variance

Labor price variance

Labor quantity variance

Costs Quantities Actual labor rate $14 per hour Actual hours incurred and used 4,120 hours Actual materials price $130 per ton Actual quantity of materials purchases and used 1,278 tons Standard labor rate $10 per hour Standard hours used 4,380 hours Standard materials price $132 per ton Standard quantity of materials used 1,180 tons

Explanation / Answer

Solution:

(A). Material Price Varience:

    Material Price Varience = ( 1,278 * 130) - ( 1,278 * 132 )

= 1,66,140 - 1,68,696

   = 2,556 Unfavarable

(B) Material Quantity Varience:

  Material Quantity Varience = 1,180 - 1,278 * 132

   = 98 * 132

= 12,936 Unfavarable

(C). Direct Labour Quantity / Efficiency Varience:

Direct Labour Efficiency Varience = ( 4,120 * 10 ) - ( 4,380 * 10 )

= 41,200 - 43,800

= 2,600 Unfavarable

(D). Direct Labour Price Varience:

   Direct Labour Price Varience = ( 10 - 14 ) 4,120

   = 4 * 4,120

   = 16,480 Unfavarable

  Material Price Varience = (AQ * AP) - ( AQ* SP)

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