Academic Integrity: tutoring, explanations, and feedback — we don’t complete graded work or submit on a student’s behalf.

Handmade, Inc. has developed the following standard cost data based on 60,000 di

ID: 2587576 • Letter: H

Question

Handmade, Inc. has developed the following standard cost data based on 60,000 direct labor hours, which is 75% of capacity.

Per Unit

Direct materials (6 lbs. @ $2.00/lb.) $12.00

Direct labor (1 hrs. @ $8.00/hr.) $8.00

During the last period, the company operated at 80% of capacity and produced 128,000 units. Actual costs were:

Direct materials (760,000 lbs.) $1,558,000

Direct labor (126,000 hrs.) $1,014,300

Required: Determine the total direct materials and total direct labor variances, direct materials price and quantity variances and the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.

Total Direct Materials variance:

Direct materials price variance

Direct materials quantity variance

Total Direct Labor Variance:

Direct labor rate variance

Direct labor efficiency variance

Please show work. Thank you!

Explanation / Answer

Total Direct Materials variance=1555800-(128000*12)= 19800 U Direct materials price variance=1558000-(760000*2)= 38000 U Direct materials quantity variance=2*(760000-128000*6)= 16000 F Total Direct Labor Variance=1014300-(128000*8)= 9700 F Direct labor rate variance=1014300-(126000*8)= 6300 U Direct labor efficiency variance=8*(126000-128000*1)= 16000 F

Hire Me For All Your Tutoring Needs
Integrity-first tutoring: clear explanations, guidance, and feedback.
Chat Now And Get Quote