Hutto Corp. has set the following standard direct materials and direct labor cos
ID: 2514465 • Letter: H
Question
Hutto Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures.
During May the company incurred the following actual costs to produce 8,700 units.
AQ = Actual Quantity
SQ = Standard Quantity
AP = Actual Price
SP = Standard Price
AH = Actual Hours
SH = Standard Hours
AR = Actual Rate
SR = Standard Rate
(1) Compute the direct materials price and quantity variances.
(2) Compute the direct labor rate variance and the direct labor efficiency variance. Indicate whether each variance is favorable or unfavorable.
Explanation / Answer
Actual Cost -28420 8700 Standard Cost AQ x AP AQ x SP SQ x SP 142,100 x $2.80 142,100 x $3.00 139,200 x $3.00 $397,880 $426,300 $417,600 28420 19720 8700 Direct materials price variance 28420 Favorable Direct materials quantity variance 8700 Unfavorable Total direct materials variance $19,720 Favorable Actual Cost 2060 48000 Standard Cost AH x AR AH x SR SH x SR 20,600 x $15.10 20,600 x $15.00 17,400 x $15.00 $311,060 $309,000 $261,000 2060 50060 48000 Direct labor rate variance 2060 Unfavorable Direct labor efficiency variance 48000 Unfavorable Total direct labor variance $50,060 Unfavorable
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