Question

Ayala Corporation accumulates the following data relative to jobs started and finished during the month of June 2020.

Costs and Production Data		Actual		Standard
Raw materials unit cost		$2.40		$2.25
Raw materials units		11,500		10,600
Direct labor payroll		$177,600		$171,760
Direct labor hours		14,800		15,200
Manufacturing overhead incurred		$202,000
Manufacturing overhead applied				$205,200
Machine hours expected to be used at normal capacity				41,500
Budgeted fixed overhead for June				$62,250
Variable overhead rate per machine hour				$3.00
Fixed overhead rate per machine hour				$1.50

Overhead is applied on the basis of standard machine hours. 3.00 hours of machine time are required for each direct labor hour. The jobs were sold for $495,000. Selling and administrative expenses were $39,300. Assume that the amount of raw materials purchased equaled the amount used.ompute all of the variances for (1) direct materials and (2) direct labor. (Round per unit values to 2 decimal places, e.g. 52.75 and final answers to 0 decimal places, e.g. 52.)

(1)		Total materials variance		$		Favorable#Unfavorable#Neither favorable nor unfavorable
		Materials price variance		$		Favorable#Unfavorable#Neither favorable nor unfavorable
		Materials quantity variance		$		Favorable#Unfavorable#Neither favorable nor unfavorable
		Total labor variance		$		Favorable#Unfavorable#Neither favorable nor unfavorable
		Labor price variance		$		Favorable#Unfavorable#Neither favorable nor unfavorable
		Labor quantity variance		$		Favorable#Unfavorable#Neither favorable nor unfavorable

Answer 1

Standard direct labor rate	11.30		=171760/15200
Total materials variance	3750	Unfavorable	=(11500*2.4)-(10600*2.25)
Materials price variance	1725	Unfavorable	=11500*(2.4-2.25)
Materials quantity variance	2025	Unfavorable	=2.25*(11500-10600)
Total labor variance	5840	Unfavorable	=177600-171760
Labor price variance	10360	Unfavorable	=177600-(14800*11.30)
Labor quantity variance	4520	Favorable	=11.3*(14800-15200)