Question

Direct Materials and Direct Labor Variances

At the beginning of June, Kimber Toy Company budgeted 15,000 toy action figures to be manufactured in June at standard direct materials and direct labor costs as follows:

Direct materials	$12,000
Direct labor	12,600
Total	$24,600

The standard materials price is $0.40 per pound. The standard direct labor rate is $12.00 per hour. At the end of June, the actual direct materials and direct labor costs were as follows:

Actual direct materials	$11,100
Actual direct labor	11,700
Total	$22,800

There were no direct materials price or direct labor rate variances for June. In addition, assume no changes in the direct materials inventory balances in June. Kimber Toy Company actually produced 13,500 units during June.

Determine the direct materials quantity and direct labor time variances. Round your per unit computations to two decimal places, if required. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Direct materials quantity variance	$
Direct labor time variance	$

Answer 1

Solution:

Budgeted Direct materials cost	12000
/ Direct materials price per pound	0.40
Budgeted quantity of Materaial (pounds)	30000
/ Budgeted units	15000
Standard Quantity of materials per unit	2.00
Budgeted Direct Labor cost	12600
/ Direct labor rate per hour	12.00
Budgeted Labor hours	1050
/ Budgeted units	15000
Standard Hours per unit	0.07

Actual Direct materials Cost	11100
Less: Standard Direct materials cost (13500 units*2*$0.40)	10800
Direct materials quantity variance (Unfavorable)	300

Actual Direct labor cost	11700
Less: Standard Direct Labor cost (13500 units*0.07*$12)	11340
Direct Labor Time variance (Unfavorable)	360