During June, Danby Company\'s material purchases amounted to 8,400 pounds at a p

Question

During June, Danby Company's material purchases amounted to 8,400 pounds at a price of $7.60 per pound. Actual costs incurred in the production of 2,200 units were as follows: Direct labor: $139,650 ($19.00 per hour) Direct material:41,040 ($7.60 per pound) The standards for one unit of Danby Company's product are as follows: Direct Labor: Direct Material: Quantity, 3 hours per unit Rate, $18.90 per hour Quantity, 2 pounds per unit Price, $7.30 per pound Required Compute the direct-material price and quantity variances, the direct-material purchase price variance, and the direct-labor rate and efficiency variances. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance).) Direct-material price variance Direct-material quantity variance Direct-material purchase price variance Direct-labor rate variance Direct-labor efficiency variance

Explanation / Answer

Direct material actual usage=41040/7.6=5400 1 Direct material price variance=5400*(7.6-7.30)= $1620 Unfavorable 2 Direct material quantity variance=7.3*(5400-2200*2)= $7300 Unfavorable 3 Direct material purchase price variance=8400*(7.6-7.30)= $2520 Unfavorable 4 Direct labor hours=139650/19= 7350 Direct labor rate variance=139650-(7350*18.9)= $735 Unfavorable 5 Direct labor efficiency variance=18.9*(7350-2200*3)= $14175 Unfavorable

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