4) Thousand Springs Company produces perfume called Syringa. The Direct material

Question

4) Thousand Springs Company produces perfume called Syringa. The Direct materials and direct labor standards for one bottle of Syringa are given below: Standard Quantity Standard Price orStandard Cost or Hours 7.2 oz 0.3 hours $2.50 per qz Direct Materials Direct Labor $18.00 per bottle rs$10.00 per hour$3.00 per bottle During the most recent month the following was recorded: 20,000 oz of material were purchased at a cost of $2.40 per oz. 18,000 oz of the material was used to produce 2,400 bottles of Syringa. 900 hours of direct labor time was recorded at a total labor cost of $10,000 . . Calculate (remember to show all work): A) The direct materials price, quantity and total (also called spending) variances for the moni: B) The direct labor rate, efficiency and total (also called spending) variances for the month.

Explanation / Answer

a) material price variance = (2.50-2.40)*20000 = 2000 F

Material quantity variance = (2400*7.2-18000)*2.50 = 1800 U

Material spending variance = (2400*18)-(18000*2.40) = None

b) Labour rate variance = (10*900-10000) = 1000 U

Labour efficiency variance = (2400*0.3-900)*10 = 1800 U

Labour spending variance = (2400*3-10000) = 2800 U

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