Question

Use the following information for the Exercises below. [The following information applies to the questions displayed below.] A manufactured product has the following information for June. Standard Actual Direct materials (7 lbs. @ $7 per lb.) 62,900 lbs. @ $7.10 per lb. Direct labor (3 hrs. @ $16 per hr.) 26,500 hrs. @ $16.50 per hr. Overhead (3 hrs. @ $13 per hr.) $ 352,600 Units manufactured 8,900 Exercise 23-8 Standard unit cost; total cost variance LO C2 (1) Compute the standard cost per unit.

Exercise 23-9 Direct materials variances LO P2

AQ = Actual Quantity
SQ = Standard Quantity
AP = Actual Price
SP = Standard Price

Compute the direct materials price variance and the direct materials quantity variance. Indicate whether each variance is favorable or unfavorable.

Compute the direct labor rate variance and the direct labor efficiency variance. Indicate whether each variance is favorable or unfavorable.

Answer 1

Material and Labour Variances are as computed below:

Material Price Variance
Actual Price	Standard Price	AP-SP	Actual Quantity	Variance (AP-SP)*Actual Qty
7.10	7.00	$0.10	62,900	6,290.00	Unfavourable
Material Usage Variance
Actual Quantity	Standard quantity	AQ-SQ	Standard Price	Variance (AQ-SQ)*SP
62,900	62,300	600	$7.00	4,200	Unfavourable
	(7*8,900)
Labour Rate variance
Actual rate	Standard rate	AR-SR	Actual hours	Variance (AR-SR)*Actual hours
16.50	16	$0.50	26,500	13,250.00	Unfavourable
Labour efficiency variance
Actual hours	Standard hours	AH-SH	Standard rate	Variance (AH-SH)*SR
26,500	26,700	-200	16	-3,200.00	Favourable
	(3*8,900)