The following direct materials and direct labor data pertain to the operations o
ID: 2489710 • Letter: T
Question
The following direct materials and direct labor data pertain to the operations of Laurel Company for the month of August.
Costs
Actual labor rate $12 per hour
Actual materials price $104 per ton
Standard labor rate $11 per hour
Standard materials price $106 per ton
Quantities
Actual hours incurred and used 4,108 hours
Actual quantity of materials purchased and used 1,365 tons
Standard hours used 4,164 hours
Standard quantity of materials used 1,353 tons
Compute the total, price, and quantity variances for materials and labor.
FavorableUnfavorableNeither favorable nor unfavorable
Materials price variance $FavorableNeither favorable nor unfavorableUnfavorable
Materials quantity variance $Neither favorable nor unfavorableFavorableUnfavorable
Total labor variance $Neither favorable nor unfavorableUnfavorableFavorable
Labor price variance $Neither favorable nor unfavorableUnfavorableFavorable
Labor quantity variance $Explanation / Answer
Material price variance = ( AR – SR) Actual qty purchased
=(104 – 106)1365
= 2,730(F)
Material qty variance = (AQ – SQ ) SR
= (1,365- 1,353) 106
= 1,272(U)
Material total variance = 2,730(F) – 1,272(U)
= 1,458(F)
Labor rate variance = (AR – SR) AH
=(12-11)4108
=4108(U)
Labor efficiency variance = (AH- SH) SR
=(4,108 – 4,164)11
=616(F)
Total labor variance = 3,492(U)
Material price variance = ( AR – SR) Actual qty purchased
=(104 – 106)1365
= 2,730(F)
Material qty variance = (AQ – SQ ) SR
= (1,365- 1,353) 106
= 1,272(U)
Material total variance = 2,730(F) – 1,272(U)
= 1,458(F)
Labor rate variance = (AR – SR) AH
=(12-11)4108
=4108(U)
Labor efficiency variance = (AH- SH) SR
=(4,108 – 4,164)11
=616(F)
Total labor variance = 3,492(U)
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