ACCT232 08-2 Name Pts._ Graded by Kowaleski Corporation makes a product with the

Question

ACCT232 08-2 Name Pts._ Graded by Kowaleski Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate $4.00 per kilo $21.00 per hour Direct materials 2.8 kilos Direct labor 0.1 hours In June the company produced 9,100 units using 27,010 kilos of the direct material and 930 direct labor-hours. During the month the company purchased 30,600 kilos of the direct material at a price of $3.70 per kilo. The actual direct labor rate was $19.90 per hour. The materials price variance is computed when materials are purchased. Required: a. Compute the materials quantity variance. b. Compute the materials price variance. c. Compute the labor efficiency variance.

Explanation / Answer

Standard Quantity per unit 2.8 Standard Quantity allowed, SQ 9100*2.8 25480 Standard Price per kg, SP 4 Actual Quantity, AQ 27010 Actual price per kg, AP 3.7 Standard Hours per unit 0.1 Standard Hours allowed, SH 0.1*9100 910 Standard Rate per hour, SR 21 Actual Hours, AH 930 Actual Rate per hour, AR 19.9 Requirement a: Material Quantity Variance (SQ*SP) - (AQ*SP) (25480*4) - (27010*4) 101920 - 108040 -6120 Requirement b: Material Price Variance (AQ*SP) - (AQ*AP) (27010*4) - (27010*3.7) 108040 - 99937 8103 Requirement c: Labor Efficiency Variance (AH*SR) - (AH*AR) (930*21) - (930*19.9) 19530-18507 1023

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