2 9 Chapter 10 (formulas for the variances will be included on the final) mpan e

Question

2 9 Chapter 10 (formulas for the variances will be included on the final) mpan eveloped the following per-unit standard for its product: direct materials at $3.10 per pound st month, 5,000 pounds of direct materials were actually purchased for $15,000. The direct 1. Direct material Price Variance is (AQ AP) (AQ SP) or (AP SP)AQ. A com La materials price variance for last month was: Please show work. 2. Direct material Quantity Variance is (AQ SP) (SQ SP) or (AQ - SQ)SP. The per-unit standards for direct materials are 3 gallons at $5 per gallon. Last month, 16,000 gallons of direct materials was actually used to produce 5.000 units of product. The direct materials quantity variance for last month was: Please show work. 3. Use the following data to determine the Labor Rate Variance Standard Direct Labor rate S25 2 hours Standard Direct Labor per unit Actual Direct Labor rate Actual Direct labor hours $26 2,250 hours 1,000 Actual units produced Labor Rate Variance Formula Labor Efficiency Variance Formula (AR - SR)AH (AH- SH)SR 4. Use the data above to determine the Labor Efficiency Variance

Explanation / Answer

1 Direct material price variance = AQ * (AP - SP) = 5000 * (15000/5000 - 3.10) -500 Favourable 2 Direct material quantity Variance =(AQ - SQ)SP = (16000 - 5000*3) 5 5000 Unfavourable 3 Direct labour rate variance =(AR - SR) AH = (26 - 25) 2250 2250 Unfavourable 4 Direct labour efficiency variance = (AH - SH) SR = (2250 - 1000*2) 25 6250 Unfavourable

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