Question

1. Bellingham Company produces a product that requires 14 standard pounds per unit. The standard price is $10.5 per pound. If 2,500 units used 35,700 pounds, which were purchased at $10.08 per pound, what is the direct materials (a) price variance, (b) quantity variance, and (c) cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

a. Direct materials price variance |
$ | Favorable |

b. Direct materials quantity variance |
$ | Unfavorable |

c. Direct materials cost variance |
$ | Favorable |

2. Bellingham Company produces a product that requires 8 standard direct labor hours per unit at a standard hourly rate of $19.00 per hour. If 3,700 units used 30,800 hours at an hourly rate of $18.43 per hour, what is the direct labor (a) rate variance, (b) time variance, and (c) cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

a. Direct labor rate variance |
$ | Favorable |

b. Direct labor time variance |
$ | Unfavorable |

c. Direct labor cost variance |
$ | Unfavorable |

Answer #1

SOLUTION:

**1A)DIRECT MATERIALS PRICE VARIANCE=14994
FAVORABLE**

(STANDARD PRICE-ACTUAL PRICE)*ACTUAL QUANTITY

(10.5-10.08)*35700

0.42*35700

14994

**1B)DIRECT MATERIALS QUANTITY VARIANCE=7350
UNFAVORABLE**

(STANDARD QUANTITY-ACTUAL QUANTITY)*STANDARD PRICE

(2500*14-35700)*10.5

(35000-35700)*10.5

(700)*10.5

(7350)

**1C)DIRECT MATERIALS COST VARIANCE=7644
FAVORABLE**

(STANDARD QUANTITY*14*STANDARD PRICE)-(ACTUAL QUANTITY*ACTUAL PRICE)

(2500*14*10.5)-(35700*10.08)

367500-359856

7644

**2A)DIRECT LABOR RATE VARIANCE=17556
FAVORABLE**

(STANDARD RATE-ACTUAL RATE)*ACTUAL HOURS

(19-18.43)*30800

0.57*30800

=17556

**2B)DIRECT LABOR TIME VARIANCE= 22800
UNFAVORABLE**

(STANDARD HOUR-ACTUAL HOUR)*STANDARD RATE

(29600-30800)*19

(1200)*19

(22800)

STANDARD HOUR=3700*8=29600

**2C)DIRECT LABOR COST VARIANCE=(5244)
UNFAVORABLE**

17556+(22800)

(5244)

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