Huron Company produces a commercial cleaning compound known as Zoom. The direct

Question

Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labour standards for one unit of Zoom follow Standard Quantity Standard Price Standard or Hours or Rate 0S Direct materials Direct labour Variable overhead 4.30 kilograms 0.60 hour 0.60 hour S 2.00 per kilogram $10.00 per hour S 1.10 per hour S 8.60 6.00 0.66 The budgeted fixed overhead cost is $15,011 per month. The denominator activity level of the allocation base is 800 direct labour-hours During the most recent month, the following activity was recorded: a. 9,500 kilograms of material were purchased at a cost of $2.18 per kilogram b. A total of 840 hours of direct labour time was recorded at a total labour cost of $9.230 C. The variable overhead cost was $1,620, and the fixed overhead cost was $15,101 Assume that the company produced 1,400 units during the month, using 6,700 kilograms of material in the production process. (The rest of the material purchased remained in inventory.) Required 1. Compute the direct materials price and quantity variances for the month. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Materials price variance Materials quantity variance

Explanation / Answer

Materials price variance=9500*(2.18-2)= $1710 U Materials quantity variance=2*(6700-1400*4.3)= $1360 U

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