Question

Materials and Labor Variances Deporte Company produces single-colored t-shirts. Materials for the shirts are dyed in...

Materials and Labor Variances

Deporte Company produces single-colored t-shirts. Materials for the shirts are dyed in large vats. After dying the materials for a given color, the vats must be cleaned and prepared for the next batch of materials to be colored. The following standards for changeover for a given batch have been established:

Direct materials (2.4 lbs. @ $0.95) $2.28
Direct labor (0.75 hr. @ $7.40) 5.55
Standard prime cost $7.83

During the year, 79,500 pounds of material were purchased and used for the changeover activity. There were 30,000 batches produced, with the following actual prime costs:

Direct materials $66,780
Direct labor $174,822 (for 22,450 hrs.)

Required:

Compute the materials and labor variances associated with the changeover activity, labeling each variance as favorable or unfavorable.

Material Variances
Price variance $
Usage variance $
Labor Variances
Rate variance $
Efficiency variance $

Homework Answers

Answer #1

Materials price Variance = Actual Quantity*Standard Price - Actual Cost

= 79500 * 0.95 - 66780 = $ 8,745 F

Materials Usage Variance = Standard Quantity * Standard Price - Actual Quantity*Standard Price

= 30000*2.28 - 79500*0.95 = $ 7,125 U

Labour rate variance = Actual Hours*Standard Price - Actual Cost

= 22450 * 7.40 - 174822 = $ 8,692 U

Labour Efficiency Variance = Standard Hours * Standard Price - Actual Hours*Standard Price

= 30000*5.55 - 22450*7.40 = $ 370 F

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