Amber Company produces iron table and chair sets. During October, Amber\'s costs
ID: 2584959 • Letter: A
Question
Amber Company produces iron table and chair sets. During October, Amber's costs were as follows $ 1.70 per lb S 6.90 per hour S1.50 per lb Actual purchase price Actual direct labor rate Standard purchase price Standard quantity for sets produced Standard direct labor hours allowed Actual quantity purchased in October Actual direct labor hours Actual quantity used in October Direct labor rate variance 910,000 lbs 1,055,000 Ibs 940,000 lbs 15,000 11,000 $4,900 F Required 1. Calculate the total cost of purchases for October. Total Purchases 2. Compute the direct materials price variance based on quantity purchased. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.) irect Materials Price Variance 3. Calculate the direct materials quantity variance based on quantity used. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.) Material Quantity VarianceExplanation / Answer
1 Total Cost of Purchase for October Actual Qty Purchased x Actual purchase rate =1055000 lbs *1.70 per lb $1,793,500.00 2 Direct Material Price Variance Std Price Actual Price Actual Qty $1.50 $1.70 1,055,000.00 (211,000.00) U 3 Direct Material Qty Variance Std Price Standard Qty Actual Qty $1.50 910,000.00 940,000.00 ($45,000.00) U 4 Standard Direct Labour Rate Direct Labour Rate Variance $4,900 F Std Rate Actual Rate Actual Hours 7.35 $6.90 11,000.00 Price Variance = Direct Labour Rate Variance / Actual Hours 0.45 Standard Rate = Actual Rate + Favourable Variance 7.35 5 Direct Labor efficicny variance Std Rate Standard Hours Actual Hours 7.35 15,000.00 11,000.00 $29,381.82 F
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