Willow Inc. has provided the following information Per unit Standards: Direct ma

Question

Willow Inc. has provided the following information Per unit Standards: Direct materials Direct labor Variable overhead Fixed overhead 10 lb $4.60/lb $ 46.00 2 hours @ $34.50/hour 69.00 2 hours @ $19/hour38.00 15.00 Total $168.00 Budgeted production 7,200 units Actual results Materials Direct labor Variable overhead Fixed overhead Units produced 73,980 lbs 14,950 actual hours $338,253 $509,330 $290,690 $104,170 7,350 units a. Calculate the direct materials price variance. (Do not round your intermediate calculations. Indicate the effect of varian selecting "Favorable", "Unfavorable", or "None" for no effect (i.e ., zero variance).) Price Variance

Explanation / Answer

Std material Lb required per unit of output 10 lb Actual production 7350 units Std Qty required for actual ouput (7350*10) 73,500 lbs Std price per lbs   $4.60 per lbs Actual material cost for 73980 lbs $338,253 Actual price per lb (338253/73980)   $4.57 per Lb Actual Qty consumed 73980 lbs ReqA. Material price variance= Actual qty consumed (Std price per lb - Actual price per lb) 73980 lbs ( 4.60 -4.57 ) = $ 2,055 favorable Req B. Material Quantity variance= Std price per lb (Std Quantity for actual output- Actual Quantity consumed) 4.60 (73500-73980)= $ 2,208 unfavorable Std hours required per unit of output 2 hours Actual ouput 7350 units Std labour hours allowed for actual output = (7350*2) = 14,700 hours Std rate per hour $ 34.50 per hour Actual hour used 14950 hours Actual labour cost $ 509,330 Actual rate per hour ( 509330/14950)   $ 34.07 per hour ReqC: Labour Rate variance= Actual hours used (Std rate per hour - Actual rate per hour) 14950 ( 34.50 - 34.07) = $ 6,445 favorable ReqD: Labour efficiency variance = Std rate perhour (Std horus allowed for actual output - Actual hours used) 34.50 (14700-14950) = $ 8,625 unfvorable

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