Question

4.Direct Materials and Direct Labor Variances

At the beginning of June, Bezco Toy Company budgeted 20,000 toy action figures to be manufactured in June at standard direct materials and direct labor costs as follows:

Direct materials $28,000
Direct labor 12,000
Total $40,000

The standard materials price is $0.7 per pound. The standard direct labor rate is $12 per hour. At the end of June, the actual direct materials and direct labor costs were as follows:

Actual direct materials $25,100
Actual direct labor 10,800
Total $35,900

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. Bezco Toy Company actually produced 17,400 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

1.direct material quantity variance:

(standard price *actual quantity) - (standard price * standard quanitty)

here,

standard price * actual quantity = $25,100......(readily given, since there is no price variance)

standard price * standard quantity = ($28,000)/ 20,000 units * 17,400 units produced

=>$24,360.

direct material quantity variance =($25,100 - $24,360)

=>$740..........(unfavorable. since the actual material usage cost is higher than standard material usage cost).

2.direct labour time variance:

(actual hours * standard cost) - (standard quantity * standard cost)

actual hours *standard cost = $10,800

standard hours *standard cost = $12,000 / 20,000 units * 17,400 units actually produced.

=>$10,440.

direct labour time variance = (10,800 - 10,440) =>$360...(unfavorable since actual labour cost is higer than standard labour cost)