tml here on the bar, Help Save & Exit Submit 5 Exercise 10-7 Direct Materials Va
ID: 2515454 • Letter: T
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tml here on the bar, Help Save & Exit Submit 5 Exercise 10-7 Direct Materials Variances [LO10-1] 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: points Quantity or 6.20 pounds 3.00 per pound 18.60 Print Direet labor hours 10.00 per hour 4.00 During the most recent month, the following activity was recorded a. Twelve thousand pounds of material were purchased at a cost of $2.90 per pound. b. The company produced only 1,200 units, using 10,800 pounds of material. (The rest of the material purchased remained in raw 580 hours of direct labor time were recorded at a total labor cost of $6,960. qua F for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero varlance), Input all amounts as positive values. Do not round 9Explanation / Answer
Direct Materials Price Variance:
= AQ x ( AP - SP)
=12,000 pounds x ($2.90 - $3.00)
= $ 1,200 F
Direct Materials Quantity Variance:
= SP x (AQ - SQ)
= $3.00 x (10,800 - [1,200 x 6.20])
= $3.00 x (10,800 - $7,440)
= $3.00 x 3,360
= $ 10,080 U
Note: The materials price variance is computed for the entire amount of materials purchased, but the materials quantity variance is computed only for the amount of materials used in production.
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