Question

Nancy Drew Manufacturing produces a single product and has prepared the following standard cost sheet for...

Nancy Drew Manufacturing produces a single product and has prepared the following standard cost sheet for one unit of the product:

Direct materials (8 pounds at 2.00 per pound) 16.00

Direct Labour (5 hours at 13 per hour) 65

During the month of April, the company manufactures 240 units and incurs the following actual costs:

Direct materials purchased and used (2000 pounds) 4420

Direct Labour (1220 hours) 15677

Instuctions : Compute and round to dollars and cents the following (indicate fav or unfav):

Total materials variance

materials price variance

materials quantity variance

Total Labour variance

Labour rate variance

labour time variance

Homework Answers

Answer #1

Total materials variance = (SQ*SR) - (AQ*AR)

= (16*240) - 4420

= 580 Unfavorable

Materials Price Variance = (SP-AP) * AQ

= (2 - 4420/2000) * 2000

= 420 Unfavorable

Materials Quantity Variance = (SQ-AQ) * SP

= (240*8 - 2000)*2

= 160 Unfavorable

Total labor variance = (SR*SH) - (AR*AH)

= (240*65) - 15677

= 77 Unfavorable

Labor Rate Variance = (SR-AR) * SH

= (13 - 15677/1220) *1220

= 183 Favourable

Labor time variance = (SH-AH) * SR

= (240*5 - 1220)*13

= 260 Unfavorable

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