Exercise 8-14 Direct Materials Variances [LO8-4] Huron Company produces a commer

Question

Exercise 8-14 Direct Materials Variances [LO8-4]

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:

The company produced only 3,000 units, using 14,750 pounds of material. (The rest of the material purchased remained in raw materials inventory.)

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).)

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:

Explanation / Answer

Materials price variance = (AC - SC) x AQ = ($2.35 - $2.50) x 20000 = $3000 F

Materials quantity variance = (AQ - SQ) x SC = (14750 - 13800) x $2.50 = $2375 U

SQ = 3000 x 4.6 = 13800

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