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

Question

Sonne Company produces a perfume called Whim. The direct materials and direct labor standards for one bottle of Whim are given below:

Compute the direct materials price and quantity variances for the month. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Sonne Company produces a perfume called Whim. The direct materials and direct labor standards for one bottle of Whim are given below:

Explanation / Answer

Hi,

Please find the answer as follows:

Direct Material Price Variance = Actual Quantity of Material Purchased *(Actual Rate - Standard Rate) = 19350*(2.60 - 2.70) = 1935 (Favorable)

Direct Material Quantity Variance = Standard Rate*(Actual Quantity - Standard Quantity of Material Used for Actual Production) = 2.70*(15350 - 1800*7.5) = 4995 (Unfavorable)

Thanks.

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