Huron Company produces a commercial cleaning compound known as Zoom. The direct

Question

Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below:

Compute the materials price and quantity variances for the month. (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 labor rate and efficiency variances for the month. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below:

Explanation / Answer

Material Price variance = Actual quantity X ( Standard Price - Actual Price )

= 19,250 ( $ 1.80 - $ 1.70 )

= 1,925 F

Material Quantity Variance = Standard Price X ( Standard quantity - Actual Quantity )

= $ 1.80 X ( 17,750 - 19,250 )

= 2,700 U

Note : Standard Quantity = 2,500 Units X 7.10 Pounds = 17,750 pounds

Labor rate Variance = Actual Hours X ( Standard Rate - Actual Rate )

= 400 X ( $12 - $ 13)

= 400 U

Labor effeciency Variance = Standard rate X ( Standard Hours - Actual Hours)

= $ 12 X ( 500 - 400 )

= 1,200 F

Note : Actual Rate = 5,200 / 400 = 13

Standard Hours = 2,500 X 0.20 = 500

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