2 The following information describes production activities of Mercer Manufactur

Question

2

The following information describes production activities of Mercer Manufacturing for the year:

  Actual raw materials used

26,000 lbs. at $4.70 per lb.

  Actual factory payroll

9,250 hours for a total of $185,000

  Actual units produced

54,000

Budgeted standards for each unit produced are 0.50 pounds of raw material at $4.65 per pound and 10 minutes of direct labor at $21.00 per hour.

(1)

Compute the direct materials price and quantity variances

The following information describes production activities of Mercer Manufacturing for the year:

Explanation / Answer

Actual Cost Standard Cost AQ x AP AQ x SP SQ x SP 26,000 x $4.70 26,000 x $4.65 27,000 x $4.65 $122,200 $120,900 $125,550 1300 4650 Direct materials price variance 1300 Unfavorable Direct materials quantity variance 4650 Favorable Total direct materials variance $3,350 Favorable Actual Cost Standard Cost AH x AR AH x SR SH x SR 9,250 x $20.00 9,250 x $21.00 9,000 x $21.00 $185,000 $194,250 $189,000 9250 5250 Direct labor rate variance 9250 Favorable Direct labor efficiency variance 5250 Unfavorable Total direct labor variance $4,000 Favorable

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