The following data was obtained for a company that makes statues: Standard Input

ID: 2502869 • Letter: T

Question

The following data was obtained for a company that makes statues:

Standard Inputs Expected For Each Unit of Output Standard Price Per Unit of Input

Direct material 5 pounds $12 per pound

Direct labor 1.5 hours $12 per hour

During the month of July, the company actually produced 1,000 statutes, which is 100 units less than

expected. Direct material purchased and used amounted to 5,500 pounds at a cost of $12.50 per pound.

Actual direct labor was 1,450 hours at an actual cost of $13.00 per hour.

Required:

A) Compute the price and quantity variances for direct materials.

B) Compute the price and quantity variances for direct labor.

A) Compute the price and quantity variances for direct materials.

Direct materials:

The price variances = (Standard Price - Actual Price)*Actual Quantity Purchased

The price variances = (12-12.50)*5500

The price variances = $ 2750 U

The quantity variances = (Standard Quantity-Actual Quantity )*Standard Price

The quantity variances = (5*1000 - 5500)*12

The quantity variances = $ 6000 U

B) Compute the price and quantity variances for direct labor.

Direct labor.

The price variances = (Standard Rate - Actual Rate)*Actual Hour

The price variances = (12-13)*1450

The price variances = $ 1450 U

The quantity variances = (Standard Hour - Actual Hour )*Standard Rate

The quantity variances = (1.5*1000 - 1450)*12

The quantity variances = $ 600 F

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