During June, Danby Company\'s material purchases amounted to 7,600 pounds at a p

Question

During June, Danby Company's material purchases amounted to 7,600 pounds at a price of $7.80 per pound. Actual costs incurred in the production of 1,900 units were as follows: Direct labor: Direct material: 48,360 (7.80 per pound) $148,365 (S18.90 per hour) The standards for one unit of Danby Company's product are as follows: Direct Labor: Direct Material: Quantity, 4 hours per unit Rate, $18.80 per hour Quantity, 3 pounds per unit Price, $7.50 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 veriance).) Direct-material price variance Direct-material quantity variance Direct-material purchase price variance Direct-labor rate variance Direct-labor efficiency variance

Explanation / Answer

Standard Actual Particulars Qty/ hours Rate amount Qty/ hours Rate amount Materials              5,700.00                      7.50            42,750.00              6,200.00                      7.80            48,360.00 Labour              7,600.00               18.8000         142,880.00              7,850.00                    18.90         148,365.00 Actual output              1,900.00 Materials reqd (1900*3)              5,700.00 Labour hrs reqd (1900*4)              7,600.00 DMPV = (SP-AP)*AQ purchased DMPV = (7.50 - 7.80)7600 DMPV = 2280 U DMQV= (SQ-AQ Used)SP DMQV= (5700 - 6200)7.5 DMQV= 3,750 U Direct Material purchase price variance = (7.50-7.80)6200 Direct Material purchase price variance = (.30)6200 Direct Material purchase price variance = 1860 U DLRV= (SR-AR)AH DLRV= (18.80- 18.90)7850 DLRV= 785 U DLEV = (SH-AH)SR DLEV = (7600 - 7850)18.80 DLEV = 4,700 U

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