3 Exercise 21-11 Direct materials and direct labor variances LO P2 1.66 Hutto Co

Question

3 Exercise 21-11 Direct materials and direct labor variances LO P2 1.66 Hutto Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures Direct materiais (14 1bs. $5 per lb.) Direct labor (2 hrs. $15 per hr.) 30 During May the company incurred the following actual costs to produce 8,100 units Direct materials (117,280 1bs. 9 $4.8e per 1b.) Direct Labor (28,see hrs. $15.10 per hr.) $562,560 309,550 AQ = Actual Quantity AP Actual Price SP Standard Price Loct AH Actual Hours SH Standard Hours

Explanation / Answer

Computation of Direct Material Price & Quantity Variance Direct Material Price variance (SP-AP)AQ ($5-$4.80)*117200 $23,440 Favourable Direc Material Quantity Variance (SQ-AQ)SP ((8100*14)-117200)*5 ($19,000) Unfavourable Computation of Direct Labour Rate & Efficiency Variance Direct Labour Rate variance (SR-AR)*AH ($15-$15.10)*20500 ($2,050) Un Favourable Direct Labour Efficiency Variance (SH-AH)SR ((2*8100)-20500)*15 ($64,500) Un Favourable

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