Amber company produces iron table and chair sets. During October, Amber\'s costs

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Amber company produces iron table and chair sets. During October, Amber's costs were as follows...

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Home Clare pi C 21.) Jay? ? 1. Ivi ? ezto.mheducat Most Visited my utrgv.eduALGEBRALoginSearch every Question 9 (of 35) Save & Exit Submit Time remaining: 1:38:15 9. Amber Company produces iron table and chair sets. During October, Amber's costs were as follows: $2.40 per lb $7.60 perhour $ 2.20 perlb Actual purchase price Actual direct labor rate Standard purchase price Standard quantity for sets produced Standard direct labor hours allowed Actual quantity purchased in October Actual direct labor hours Actual quantity used in October Direct labor rate variance 980.000 lbs 1,125,000 lbs 1,010.000 lbs 12,000 11.000 $5.600 F Required 1. Calculate the total cost of purchases for October Total Purchases Macro II Sc2 1080 30 29... Chapter 10 test bank o Study Notes

Explanation / Answer

1.) Total cost of material purchase in october.

Actual purchase price * Actual quantity purchase

$2.40 *1125000 Lbs= $ 27,00,000

2.) Direct materials price variance based on quantity purchased

Actual purchase(standard unit price - actual unit price)

1125000($2.20-2.40)= $225000 Unfavorable

3.) Direct material quantity variance based on based on quantity used

Standard price per unit (standard quantity - actual quantity )

$2.20(980000 -1010,000)= $66000 unfavourable

4.) Standard direct labour rate for october

standard direct labour cost / standard labour hours

but standard dirct labour cost is not given so we can find standard labour rate from direct labour rate variance

direct labour rate variance = actual time taken ( standard rate - actual rate )

11000 hours( standard rate - $7.60)= $5600 favourable

let us assume standard rate as X

11000(X-7.60)= 5600$

11000X - 83600$=5600$

11000X=83600+5600

11000X=89200$

X=892000$11000

X=8.1090$ or round to two decimal places $ 8.11

5.) Direct materials efficiency variances

standard rate ( standard time for actual output - actual time workeda)

$8.11(12000-11000)=$8110 favourable  

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