Question

Exercise 11-8 a The following direct materials and direct labor data pertain to the operations of Laurel Company for the month of August. Costs Actual labor rate $14 per hour Actual materials price $180 per ton Standard labor rate $13.50 per hour Standard materials price $183 per ton Quantities Actual hours incurred and used 4,900 hours Actual quantity of materials purchased and used 1,700 tons Standard hours used 4,960 hours Standard quantity of materials used 1,680 tons (a) Compute the total, price, and quantity variances for materials and labor. Total materials variance $ 5100 Materials price variance $ 3660 Materials quantity variance $ Total labor variance $ Labor price variance $ Labor quantity variance $ Click if you would like to Show Work for this question: Open Show Work

Answer 1

Materials price variance = (Actual quantity * Actual price) - (Actual quantity * Standard price)

= (1,700 * $180) - (1,700 * $183)

= $306,000 - $311,100

= $5,100 Favourable

Materials quantity variance = (Actual quantity * Standard price) - (Standard quantity * Standard price)

= (1,700 * $183) - (1,680 * $183)

= $311,100 - $307,440

= $3,660 Unfavourable

Labour rate variance = (Actual hours * Actual rate) - (Actual hours * Standard rate)

= (4,900 * $14) - (4,900 * $13.5)

= $68,600 - $66,150

= $2,450 Unfavourable

Labour efficiency variance = (Actual hours * Standard rate) - (Standard hours * Standard rate)

= (4,900 * $13.5) - (4,960 * $13.5)

= $66,150 - $66,960

= $810 Favourable