value: 3.00 points E9-13 Determining Actual Costs, Standard Costs, and Variances
ID: 2529686 • Letter: V
Question
value: 3.00 points E9-13 Determining Actual Costs, Standard Costs, and Variances [LO 9-3, 9-4] Amber Company produces iron table and chair sets. During October, Amber's costs were as follows $ 2.70 per lb $7.90 per hour $ 2.50 per lb Actual purchase price Actual direct labor rate Standard purchase price Standard quantity for sets produced Standard direct labor hours allowed Actual quantity purchased in 215,000 lbs. October Actual direct labor hours Actual quantity used in Octobe 1,040,000 bs. Direct labor rate variance 1,010,000 Ibs. 21,000 14,000 $5,900 F Required 1. Calculate the total cost of purchases for October ases 2. Compute the direct materials price variance based on quantity purchased. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.) 3. Calculate the direct materials quantity variance based on quantity used. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.) ntity 4. Compute the standard direct labor rate for October. (Round your answer to 2 decimal places.) Standa r Rate 5. Compute the direct labor efficiency variance for October. (Round your intermediate calculation to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.) encyExplanation / Answer
1). Total Costs for purchases of October = 1,215,000 lbs*2.70 per lb = $3280500
2).Direct Material price variance based on qty purhased = (Std price - Actual price)*Actual Qty purchased
= (2.5 - 2.7)*1,215,000 = $243000 U
3). Direct Material Qty variance = (Std qty for actual production - Actual Qty)*Std rate
=(1,010,000 - 1,040,000)*2.5 = $75000 U
4). Direct labour rate variance = (Std rate per hour - Actual rate per hour)*Actual hrs worked = 5900
5900 = (Std rate - 7.90)*14000
5900 = Std rate*14000 - 110600
Std rate*14000 = 116500
Std rate = 116500/14000 = 8.321 per hour
5).Direct labour efficiency variance = (Std hrs for actual production - Actual hrs)* Std rate per hour
= (21000-14000)*8.321 = $58247 F
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