Betty’s Bakery has the following standard cost sheet for one unit of its most popular cake:
SQ SP Direct materials 1.2 pounds $ 1.50 per pound
Direct labor 0.8 hours $ 12.00 per hour
During the month of May, the company made 880 cakes and incurred the following actual costs. Direct materials purchased and used (1,300 pounds) $1,690 Direct labor (940 hours) $10,810 Required: 1. Calculate the direct materials price variance. 2. Calculate the direct materials quantity variance. 3. Calculate the direct materials variance. 4. Calculate the direct labor rate variance. 5. Calculate the direct labor efficiency variance. 6. Calculate the direct labor spending variance.
Materials Price Variance = (SP-AP)*AQ = (1.50-1690/1300)*1300 = 260 Favourable |
Materials Quantity Variance = (SQ-AQ) * SP = (880*1.2 - 1,300)*1.50 = 366 Unfavorable |
Materials Quantity Variance = 260 F + 366 U = 106 Unfavorable |
Labor Rate Variance = (SR-AR)*AH = (12-10810/940)*940 = 470 Favourable |
Labor efficiency variance = (SH-AH) *SR = (880*0.8-940)*12 = 2832 Unfavorable |
Labor spending variance = 470 F + 2832 U = 2362 Unfavorable |
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