Stewart Corporation makes a product with the following standard costs Standard S

Question

Stewart Corporation makes a product with the following standard costs Standard Standard Standard Quantity Price or Cost Per Unit or Hours Rate Direct 9.3 $8.00 per $74.40 materials pounds pound Direct 0.4 hours per hour $19.00 $7.60 company reported the following results concerning this product in August The Originally budgeted output Actual output Raw materials used in production Purchases of raw materials Actual direct labor-hours Actual cost of raw materials purchases $264,420 Actual direct labor cost 3,000 units 3,100 units 30,370 pounds 33,900 pounds 1,340 hours $27,872 The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. Required: a. Compute the materials quantity variance. b. Compute the materials price variance. c. Compute the labor efficiency variance. d. Compute the labor rate variance.

Explanation / Answer

a) Material quantity variance = (3100*9.3-30370)*8 = 12320 Unfavorable

b) Material price variance = (8*33900-264420) = 6780 Favorable

c) Labour efficiency variance = (3100*.4-1340)*19 = 1900 Unfavorable

d) Labour rate variance = (19*1340-27872) = 2412 Unfavorable

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