mework Reed Corp. has set the following standard direct materials and direct lab

Question

mework Reed Corp. has set the following standard direct materials and direct labor costs per unit for the product it manufactures Direet materials (15 lbs. $4 per 1b.) Direct labor (4 hrs. $14 per hr. $60 During June the company incurred the following actual costs to produce 9,000 units. birect naterials (137.300 Iba.$3.a0 per 1b.) Direct labor (39,300 hrs. $14.15 per hr.). 521,740 556.095 AQ Actual Quantity Sa Standard Quantity AP Actual Price SP Standard Price AH Actual Hours SH = Standard Hours AR Actual Rate SR Standard Rate ) Compute the direct materials price and quantity variances (2) Compute the direct labor rate variance and the direct labor efficiency varñance.Indicate whether each variance is favorable or unfavorable Complete this question by entering your answers in the tabs below.

Explanation / Answer

DM Quantity variance AQ x SP - SQ x SP 9000 x 4 - 9153 x 4 = (612) Favourable DM Price variance AQ XAP - AQ X SP 9000 x 4 - 9000 x 3 = 9000 Un Favourable Direct labour Rate varince AH XAR - AH X SR 39300 x 14.15 - 39300 x 14 = 5895 Un Favourable Direct labour Efficiency varince AH X SR - SHX SR 39300 x 14 - 36612 x 4 = 37632 Un Favourable AQ = 9000, AP = 3, SP = 4, SQ = ? SQ = Actual Consumption/Standard consumption SQ = 1,37,300/15 SQ = 9153 units AH = 39,300, AR = 14.15, SR = 14, SH =? SH = Standard input x Standard hours SH = 9153 x 4 = 36,612 hours

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