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: During the most recent month, the following activity was recorded: Eleven thousand eight hundred pounds of material were purchased at a cost of $2.40 per pound. The company produced only 1,180 units, using 10,620 pounds of material. (The rest of the material purchased remained in raw materials inventory.) Six hundred and ninety hours of direct labor time were recorded at a total labor cost of $8,280. Required: Compute the materials price and quantity variances for the month. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

Explanation / Answer

A)

Materials price variance= Actual Quantity purchased (Actual price- Standard price)

Materials price variance= 11,800 * ($2.40 - $2.50) = $1180 Favorable

B)

Materials quanity variance= Standard price (Actual quantity used- Standard quantity)

Materials quanity variance= $2.5 (10,620 - 7,198) = 8,555 Unfavorable

The standard quantity = 1180* 6.1 = 7198

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