Huron Company produces a commercial cleaning compound known as Zoom. The direct

Question

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: Standard Quantity or Hours Standard Price or Rate Standard Cost Direct materials 5.30 pounds $ 2.50 per pound $ 13.25 Direct labor 0.50 hours $ 5.50 per hour $ 2.75 During the most recent month, the following activity was recorded: Ten thousand two hundred pounds of material were purchased at a cost of $2.40 per pound. The company produced only 1,020 units, using 9,180 pounds of material. (The rest of the material purchased remained in raw materials inventory.) 610 hours of direct labor time were recorded at a total labor cost of $7,320. Required: Compute the materials price and quantity variances for the month. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.)

Explanation / Answer

Material price variance = (Standard rate-actual rate)Actual quantity

= (2.5-2.4)*10200

Material price variance = 1020 F

Material quantity variance = (Standard quantity-actual quantity)Standard rate

= (1020*5.3-9180)*2.5

Material quantity variance = 9435 U

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