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Safari File Edit View History Bookmarks window Help ezto.mheducation.com Chapter 8 Confirmation-FAFSA on the Web- Federal Student Aicd value: 10.00 points uron 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 Price or Rate Quantity or Standard Hours Direct materials Direct labor 7.50 pounds $ 2.40 per pounds $18.00 0.80 hours $ 7.00 per hourS 5.60 During the most recent month, the following activity was recorded: a. 13,250 pounds of material were purchased at a cost of $2.20 per pound. b. All of the material purchased was used to c. 1 ,000 hours of direct labor time were recorded at a total labor cost of S9.000. 1,500 units of Zoom. 1. 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).) Direct materials price variance Direct materials quantity variance 18

Explanation / Answer

SOLUTION

Material Price variance = Actual quantity * (Actual price - Standard price)

= 13,250 pounds * ($2.20 per pound - 2.40 per pound)

= 13,250 pounds * $0.20 per pound

= $2,650 (F)

Material Quantity Variance = Standard price * (Actual quantity - Standard quantity)

= $2.40 per pound * (13,250 - 11,250)

= $2.40 per pound * 2,000

= $4,800 (U)

Standard quantity = 1,500 units * 7.50 pounds = 11,250 pounds

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