Question

A company provided the following direct materials cost information. Compute the direct materials quantity variance. Standard...

A company provided the following direct materials cost information. Compute the direct materials quantity variance.

Standard costs assigned:
Direct materials standard cost (492,000 units @ $2.70/unit) $ 1,328,400
Actual costs:
Direct materials costs incurred (490,070 units @ $3.00/unit) $ 1,470,210

Multiple Choice

  • $141,810 Favorable.

  • $5,790 Unfavorable

  • $5,790 Favorable.

  • $5,211 Favorable.

  • $5,211 Unfavorable.

    Hassock Corp. produces woven wall hangings. It takes 4 hours of direct labor to produce a single wall hanging. Hassock’s standard labor cost is $12 per hour. During August, Hassock produced 18,000 units and used 72,130 hours of direct labor at a total cost of $863,560. What is Hassock’s labor rate variance for August?

    Multiple Choice

  • $1,996 favorable.

  • $2,000 unfavorable.

  • $2,000 favorable.

  • $3,996 favorable.

  • $1,996 unfavorable.

Business   Accounting   
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Homework Answers

Answer #1
Direct Material Quantity Variance
Formula
= (Actual Quantity - Standard Quantity)*Standard Price
= (490070-492000)*2.70
= -5211
= 5211 Unfavourable
Labour Rate Variance
Formula
= (Actual Rate - Standard Rate)*Actual hours Worked
= (11.97-12)*72130
=        -2,000
= 2000 Unfavourable
Calculation of Actual rate
= 863560
72130
=          11.97
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