(1) Compute the direct materials price and quantity variances. (2) Compute the direct labor rate variance and the direct labor efficiency variance.
(1) Compute the direct materials price and quantity variances. (2) Compute the direct labor rate variance and the direct labor efficiency variance.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 13E: Wyandotte Company provided the following information for the last calendar year: During the year,...
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Required 1 Required 2
Compute the direct materials price and quantity variances.
Note: Indicate the effect of each variance by selecting favorable, unfavorable, or no variance.
Actual Cost
$
0
$
0
0
$
0
Required 2
Standard Cost
Transcribed Image Text:Lucia Company has set the following standard cost per unit for direct materials and direct labor.
Direct materials (16 pounds @ $5 per pound)
Direct labor (4 hours @ $14 per hour)
During May the company incurred the following actual costs to produce 8,300 units.
Direct materials (134,900 pounds @ $4.80 per pound)
Direct labor (36,300 hours @ $14.10 per hour)
$ 647,520
511,830
AR = Actual Rate
SR = Standard Rate
AQ = Actual Quantity
SQ = Standard Quantity
AP = Actual Price
SP = Standard Price
AH = Actual Hours
SH = Standard Hours
$ 80
56
(1) Compute the direct materials price and quantity variances.
(2) Compute the direct labor rate variance and the direct labor efficiency variance.
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