Sonny Company produces a perfume called Whim. The direct materials and direct la

Question

Sonny Company produces a perfume called Whim. The direct materials and direct labor standards for one bottle of Whim are given below: e the direct materials price and quantity variances for the month. (Do not round your per unit rates. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Round your intermediate calculations and final answers to the nearest dollar amount.) During the most recent month, the following activity was recorded: a. 9,300 ounces of material were purchased at a cost of $ 2.20 per ounce. b. All of the material was used to produce 1,000 bottle of Whim. c. 200 hours of direct labor time were recorded at a total labor cost of $ 1,400. Required: 1. Computer the direct materials pirce and quantity variances for the month.

Explanation / Answer

Direct material price variance = Actual quantity * actual price - actual quantity * standard price

= 9300 * 2.20 - 9300 * 2.50

= 20460 - 23250 = 2790 unfavourable

Direct material quantity variance = [standard quantity - actual quantity ] * standard price

= [ 7800 - 9300 ] * 2.50

= 3750 unfavourable

Direct labor rate variance = actual quantity * actual rate - actual quantity * standard rate

= 1400 - 200 * 6

= 200 favourable

Direct labor efficiency variance = actual hours * standard rate - standard hours * standard rate

= 200 * 6 - 300 * 6

= 1200 - 1800 = 600 unfavourable

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