Exercise 8-13 Direct Materials and Direct Labor Variances [LO8-4, LO8-5] Huron C

Question

Exercise 8-13 Direct Materials and Direct Labor Variances [LO8-4, LO8-5] Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below: Standard Quantity or Standard Price or Rate Hours 7.40 pounds $ 2.60 per pounds 0.45 hours Standard Cost $19.24 $ 3.60 Direct materials Direct labor S 8.00 per hour During the most recent month, the following activity was recorded a. 12,100 pounds of material were purchased at a cost of S2.50 per pound b. All of the material purchased was used to produce 1,500 units of Zoom C. 575 hours of direct labor time were recorded at a total labor cost of $5.750 Required 1. Compute the 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).) Direct materials price variance Direct materials quantity variance 2. Compute the labor rate and efficiency 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) Do not round your intermediate calculations.) Direct labor rate variance Direct labor efficiency variance

Explanation / Answer

1) Direct material price variance = (2.60-2.50)*12100 = 1210 F

Direct material quantity variance = (1500*7.4-12100)*2.6 = 2600 U

2) Direct labour rate variance = (8*575-5750) = 1150 U

Direct labour efficiency variance = (1500*0.45-575)*8 = 800 F

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