Question

Levine Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product. Direct materials (8 pounds at $2.50 per pound) $20 Direct labor (3 hours at $12.00 per hour) $36 During the month of April, the company manufactures 230 units and incurs the following actual costs. Direct materials purchased and used (1,900 pounds) $5,035 Direct labor (700 hours) $8,120 Compute the total, price, and quantity variances for materials and labor.

Answer 1

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

Standard:

Direct materials (8 pounds at $2.50 per pound) $20

Direct labor (3 hours at $12.00 per hour) $36

Actual:

The company manufactures 230 units

Direct materials purchased and used (1,900 pounds) $5,035

Direct labor (700 hours) $8,120

Direct material:

Direct material price variance= (standard price - actual price)*actual quantity

Direct material price variance= [2.5 - (5,035/1,900)]*1,900= $285 unfavorable

Direct material quantity variance= (standard quantity - actual quantity)*standard price

Direct material quantity variance= (230*8 - 1,900)*2.5= $150 unfavorable

Total variance= 285 + 150= $435 unfavorable

Direct labor:

Direct labor efficiency variance= (SQ - AQ)*standard rate

Direct labor efficiency variance= (3*230 - 700)*12= $120 unfavorable

Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity

Direct labor rate variance= (12 - 8,120/700)*700= $280 favorable

Total variance= 280 - 120= $160 favorable