Nona Inc., which produces a single product, has prepared the following standard

Question

Nona Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product. Direct materials (6 pounds at $1.60 per pound) $9.60 Direct labor (4 hours at $13.00 per hour) $52.00 During the month of April, the company manufactures 320 units and incurs the following actual costs. Direct materials purchased and used (2,000 pounds) $3,600 Direct labor (1,290 hours) $16,615 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 $ Labor quantity variance

Explanation / Answer

Answer:-

Calculation of Material and Labour Variance as given below:-

Material price variance = AQ (SP-AP)

= 2000(1.60-1.80) = 400 ADVERSE

Material quantity variance = SP (SQ-AQ)

= 1.60 (1920-2000) = 128 ADVERSE

Total Material Variance = SQ* AO/SO

= 6*320/1= 1920

Labour price variance = AT (SR- AR)

= 1290 (13-12.88) = 155 FAVORABLE

Labour efficiency variance = SR ( ST-AT)

= 13 (1280-1290) = 130 ADVERSE

Total Labour variance = ST* AO/SO = 4*320/1 = 1280

AQ STAND FOR ACTUAL QUANTITY

SP STAND FOR STANDARD PRICE

AP STAND FOR ACTUAL PRICE

AT STAND FOR ACTUAL TIME

SR STAND FOR STANDARD RATE

AR STAND FOR ACTUAL RATE

AO STAND FOR ACTUAL OUTPUT

SO STAND FOR STANDARD OUTPUT

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