Question

3)   At a sales level of $30,000 units the budgeted data for materials is as follows: 100,000 units at $3 each. The actual data was 200,000 units used at a price of $3 each.
a)   Compute the Materials Price Variance
b)   Compute the Materials Quantity Variance

4)   At a sales level of 30,000 the budget data for labor is as follows: 40000 hours at $15 an hour. The actual data was 40000 hours at $11.25 an hour.
A)   Compute the Labor Rate Variance.
B)   Compute the Labor Efficiency Variance.

Answer 1

Answer 3 (a) :

Material Price Variance = (Standard Price - Actual Price)*Actual Quantity

= ($3-$3)*200000

= $0

(b): Material Quantity variance = (Standard Units - Actual units)* Standard Rate

= (100000-200000)*$3

= ($300000) [Adverse]

Answer 4 (a) :

Labour Rate Variance = (Standard Rate-Actual Rate)*Actual Hour

= ($15-$11.25)*40000

= $150000 (Favorable)

Labour Efficiency Variance = ( Standard Hour-Actual Hour)*Standard Rate

= (40000-40000)*$15

= $0

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