Jay Levitt Company budgeted the following cost standards for the
|Direct materials (2 kg of plastic at $5 per kilogram)||$10.00|
|Direct labour (2 hours at $12 per hour)||24.00|
|Variable manufacturing overhead||11.85|
|Fixed manufacturing overhead||6.15|
|Total standard cost per unit||$52.00|
Actual costs for producing 2,690 units were as follows:
|Direct materials used||5,920||kg|
|Direct materials purchased (6,730 kg)||$32,304|
|Direct labour (6,950 hours)||$67,415|
|Variable manufacturing costs||$32,200|
|Fixed manufacturing costs||$17,700|
1. Calculate the materials price variance for materials purchased. Favourable or unfavourable ?
2. Calculate the materials quantity variance.Favourable or unfavourable ?
3.Calculate the labour price variance. (Round answer to the nearest whole dollar, e.g. 5,275.) Favourable or unfavourable ?
4.Calculate the labour quantity variance. Favourable or unfavourable ?
a. Materials price variance = (Actual quantity purchased * Actual price) - (Actual quantity purchased * Standard price)
= $32,304 - (6,730 * $5)
= $1,346 Favorable
b. Materials quantity variance = (Actual quantity used * Standard price) - (Standard quantity * Standard price)
= (5,920 * $5) - (2,690 * 2 * $5)
= $2,700 Unfavorable
c. Labour rate variance = (Actual hours * Actual rate) - (Actual hours * Standard rate)
= $67,415 - (6,950 * $12)
= $15,985 Favorable
d. Labour efficiency variance = (Actual hours * Standard rate) - (Standard hours * Standard rate)
= (6,950 * $12) - (2,690 * 2 * $12)
= $18,840 Unfavorable
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