Question 12 (1 point) The direct materials standsrds for the main produict of Vi

Question

Question 12 (1 point) The direct materials standsrds for the main produict of Vista Company are 2 pounds of direct matrerial per pot at a cost of $3 psr pound. During the current period, 600 pounds of direct materials were purchased for $1,920. All of the direct materials were used to manufacture 295 pots. Vista's direct materials price variance was $150(F) O $150(U) O $120(U) Save Question 13 (1 point) Company A has computed direct labor standards for the manaufacture of its products to be 4 hours of labor aper product at a cost of $15 per hour. During March, the company produced 45 products in 185 hours and incurred direct labor costs of $2,720. Company A's direct labor efficiency variance was O $150(U) $75(U) O $130(F) $130(U)

Explanation / Answer

Question 12.

Direct material price variance is the difference between standard price and actual price per unit of material paid for the actual quantity of material purchased. If the value of direct material price variance is positive it means that direct material was purchased for lesser amount than the standard price. If the value of direct material price variance is negative it means that direct material was actually purchased for higher amount than the standard price. The formula to calculate direct material price variance is as follows:

Direct material price variance = (SP - AP) * AQ

Where,

SP = Standard price/unit of the direct material

AP = Actual price/unit paid for purchase of the direct material

AQ = Actual quantity of direct material purchased

Given that $1,920 is paid for purchase of 600 pounds of direct material. Therefore, actual price paid for purchase of material is @03.2) (@1,920/600) per pound. The standard price per pound is $3. So, Direct material price variance will be as follows:

Direct material price variance = ($3 - $3.20) * 600

Direct material price variance = - $120 or $120 (U)

The value of direct material price variance is $120 (U) which is unfavorable because direct material is purchased at price higher than standard price.

Question 13:

Direct labor efficiency variance is the difference between standard direct labor hours allowed and actual direct labor hours used for the standard labor rate. If the value of direct labor efficiency variance is positive it means that actual direct labor hours used are less than standard direct labor hours allowed. If the value of direct labor efficiency variance is negative it means that actual direct labor hours used are more than standard direct labor hours allowed.

The formula to calculate direct labor efficiency variance is as follows:

Direct labor efficiency variance = (SH - AH) * SR

Where,

SH = Standard direct labor hours allowed for actual production

AH= Actual direct labor hours used in actual production

SR = Standard price allowed per direct labor hour

Given in problem that 185 labor hours is used to produce 45 products. Standard price per labor hour is $15. Standard labor hour per product is 4 hours.

Therefore, standard labor hours required to produce 45 products = 180 hours (45*4)

Direct labor efficiency variance = (180 labor hours - 185 labor hours) * $15

Direct labor efficiency variance = -$75 or $75 (U)

The value of direct labor efficiency variance $75 (U) is negative which means that actual direct labor hours used are more than standard direct labor hours allowed.

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.