Suds & Cuts is a local pet grooming shop owned by Collin Bark. Collin has prepared the following standard cost card for each dog bath given: Standard Quantity Standard Rate Standard Unit Cost Shampoo 2.3 oz. $ 0.60 per oz. $ 1.38 Water 21 gal. $ 0.05 per gal. 1.05 Direct labor 1.35 hr. $ 11.00 per hr. 14.85 During the month of July, Collin’s employees gave 410 baths. The actual results were 755 ounces of shampoo used (cost of $520.95), 7,100 gallons of water used (cost of $639), and labor costs for 350 hours (cost of $4,375). Required: 1. Calculate Suds & Cuts direct materials variances for both shampoo and water for the month of July. 2. Calculate Suds & Cuts direct labor variances for the month of July.
1.Direct material price variance = (Standard Price – Actual Price)*Actual Quantity
Shampoo = (0.60 – Actual Price)*755
= 0.60*755 – 520.95
= $67.95 U
Water = (0.05 – Actual Price)*7,100
= 0.05*7,100 – 639
= $284 U
Direct Material Quantity Variance = (Standard Quantity – Actual Quantity)*Standard Price
Shampoo = (2.3*410 – 755)*0.6
= $112.8 F
Water = (21*410 – 7100)*0.05
= $75.5 F
Direct Labor Rate variance = (Standard Rate – Actual Rate)*Actual Hours
= (11 – Actual Rate)*350
= 11*350 – 4,375
= $525 U
Direct Labor Efficiency Variance = (Standard Hours – Actual Hours)*Standard Rate
= (410*1.35 – 350)*11
= $2,238.5 F
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