Exercise 23-7 Compute the total, price, and quantity variances for materials and
ID: 2515732 • Letter: E
Question
Exercise 23-7
Compute the total, price, and quantity variances for materials and labor.
Exercise 23-7
Levine Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product.Direct materials (8 pounds at $2.50 per pound) $20 Direct labor (3 hours at $12.00 per hour) $36
During the month of April, the company manufactures 230 units and incurs the following actual costs.
Direct materials purchased and used (1,900 pounds) $5,035 Direct labor (700 hours) $8,120
Compute the total, price, and quantity variances for materials and labor.
Explanation / Answer
Total material variance = (230*20-5035) = 435 Unfavorable
Material price variance = (2.50*1900-5035) = 285 Unfavorable
Material quantity variance = (230*8-1900)*2.50 = 150 Unfavorable
Total labour variance = (230*36-8120) = 160 Favorable
Labour price variance = (12*700-8120) = 280 Favorable
Labour efficiency variance = (230*3-700)*12 = 120 Unfavorable
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