3 Exercise 21-11 Direct materials and direct labor varlances LO P2 Hutto Corp. h
ID: 2572784 • Letter: 3
Question
3 Exercise 21-11 Direct materials and direct labor varlances LO P2 Hutto Corp. has set the 1 standard direct materials and dlrect labor costs per unit for the product it manufactures Direct material. (16 lbs. 84 per 1b. Direct labor 13 hes.16 per he.) 40 During May the company incurred the following actual costs to produce 8,200 units. eBook Direet naterials (133,500 1b 3.80 per lb.$507,30 pireet labor 127,900 hr.$16.10 per hr 449,190 Hint AQ Actual Quantity so- Standard Quantity AP Actuall Price SP Standard Price eterences AH Actual Hours SH Sandard Hours AR Actual Rate SR-Standard Rate Compute the direct materials price and quantity variances. (2) Compute the direct labor unfavorable. rate variance and the direct labor efficiency variance. Indicate whether each variance is favorable or Complete this question by entering your answers in the tabs below. Required 1Required 2 Compute the direct materials price and quantity varlances and classify it as favorable or unfavorable.Explanation / Answer
Standard direct materials per unit = 16lbs
Standard direct material cost per lb = 4
Actual direct materials purchased = 133,500 lbs
Actual direct materials cost per lb = 3.8
1.
Direct materials price variance = Actual quantity * (Standard price - Actual price)
= 133,500 * (4 - 3.8)
= 26,700 Favourable.
Direct materials quantity variance = Standard price * (Standard quantity - Actual quantiy)
= 4 * (131,200 - 133,500)
= 9,200 Unfavourable.
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Standard direct labour hours per unit = 3
Standard direct labour rate per hour = 16
Actual direct labour hours = 27,900
Actual direct labour rate per hour = 16.10
2.
Direct materials rate variance = Actual hours * (Standard rate - Actual rate)
= 27,900 * (16 - 16.10)
= 2,790 Unfavourable.
Direct labour efficiency variance = Standard rate * (Standard hours - Actual hours)
= 16 * (24,600 - 27,900)
= 52,800 Unfavourable.
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