The tollowing direct matenals and direct labor data pertain to the operations ot

Question

The tollowing direct matenals and direct labor data pertain to the operations ot Laurel Company tor the month or August Costs Actual labor rate Actual materials price Standard labor rate Standard materials price $13 per hour $220 per ton $12.50 per hour $224 per ton Quantities Actual hours incurred and used Actual quantity of materials purchased and used Standard hours used Standard quantity of materials used 4,200 hours 1,600 tons 4,280 hours 1,580 tons Compute the total, price, and quantity variances for materials and labor. Total materials veriance.Favorab Materials price variance Materials quantity variance Total labor variance Favorable Unfavorable Unfavorable Unfavorable Labor price variance Labor quantity variance Favorable

Explanation / Answer

SQ= Std Quantity
SR = Std rate
AQ= Actual Qty
AR = Actual rate

Total Material variance = (SQ * SR) - (AQ* AR)
= (1580*224) - (1600*220) = 353920 - 352000 = 1920 F

Material Price variance = (SR - AR) * AQ
= (224-220) * 1600 = 6400 F

Material Qty variance = (SQ- AQ) * SR
= (1580 - 1600) * 224 = 4480 U

Total labour variance = Std labour cost for actual production - Actual labour cost
= (4280 * 12.5 ) - (4200 * 13) = 53500 - 54600 = 1100 U

Labour Price variance = (Std rate pre hr - Actual rate per hr) * Actual hrs
= (12.5 - 13) * 4200 = 2100 U

Labour qty variance = (Std hrs for actual production - Actual hrs) * Std rate per hr
= (4280 - 4200 ) * 12.5 = 1000 F

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