Exercise 21-15 Direct materials and direct labor variances LO P2 The following i

Question

Exercise 21-15 Direct materials and direct labor variances LO P2 The following information describes production activities of Mercer Manufacturing for the year Actual direct materials used 35,000 lbs. at $6.00 per lb Actual direct labor used 11,050 hours for a total of $230,945 Actual units produced 66,000 Budgeted standards for each unit produced are 0.50 pounds of direct material at $5,95 per pound and 10 minutes of direct labor at $21.90 per hour (1) Compute the direct materials price and quantity variances. (Do not round intermediate calculations.) Actual Cost Standard Cost (2) Compute the direct labor rate and efficlency variances Indicate whether each varlance is favorable or unfavorable (Do not round intermediate calculations

Explanation / Answer

a) Material price and quantity variance :

b) Labour rate and quantity variance :

Actual cost Standard cost AQ AP AQ*AP AQ SP AQ*SP SQ SP SQ*SP 35000 6 210000 35000 5.95 208250 33000 5.95 196350 1750 11900 Material price variance 1750 Unfavorable Material quantity variance 11900 Unfavorable Total material variance 13650 Unfavorable

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