Demizio Valley Orchards, Inc. (DVO), developed standard costs for direct materia

Question

Demizio Valley Orchards, Inc. (DVO), developed standard costs for direct material and direct labor. In 2015, DVO estimated the following standard costs for one of their most well loved products, the DVO classic Grandma's large apple pie which had a brown sugar coating on the top of the crust as well as including cranberry and mince ingredients in addition to the apples. Budgeted price Direct materials Direct labor Budgeted quantity 2.0 pounds 0.20 hours $6.25 per pound $13.00 per hour During September, DVO produced and sold 1,100 pies using 2,100 pounds of direct materials at an average cost per pound of $6.00 and 200 direct labor hours at an average wage of $13.50 per hour. a) The direct material price variance during September is ? b) The direct material efficiency variance during September is ? c) The direct labor price variance during September is? d) The direct labor efficiency variance during September is?

Explanation / Answer

a) Material price variance = (standard price-actual price)actual quantity

= (6.25-6)2100

Material price variance = 525 F

b) Material efficiency variance = (Standard quantity-actual quantity)Standard price

= (1100*2-2100)6.25

Material efficiency variance = 625 F

c) Labour price variance = (standard price-actual price)actual hours

= (13-13.50)200

Labour price variance = 100 U

d) Labour efficiency variance = (Standard hours-actual hours)Standard price

= (1100*0.20-200)13

Labour efficiency variance = 260 F

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