Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below: Standard Quantity or Hours. 7.50 pounds 0.80 hours Standard Cost Direct materials Standard Price or Rate $ 2.40 per pound $7.00 per hour Direct labor $ 18.00 $5.60 During the most recent month, the following activity was recorded: a. 13,250.00 pounds of material were purchased at a cost of $2.20 per pound. b. All of the material purchased was used to produce 1,500 units of Zoom. c. 1,000 hours of direct labor time were recorded at a total labor cost of $9,000. Required: 1. Compute the materials price and quantity variances for the month. 2. Compute the labor rate and efficiency variances for the month. (For all requirements, Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Round your intermediate calculations to the nearest whole dollar.) 1. Materials price variance 1. Materials quantity variance 2. Labor rate variance 2. Labor efficiency variance
Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below: Standard Quantity or Hours. 7.50 pounds 0.80 hours Standard Cost Direct materials Standard Price or Rate $ 2.40 per pound $7.00 per hour Direct labor $ 18.00 $5.60 During the most recent month, the following activity was recorded: a. 13,250.00 pounds of material were purchased at a cost of $2.20 per pound. b. All of the material purchased was used to produce 1,500 units of Zoom. c. 1,000 hours of direct labor time were recorded at a total labor cost of $9,000. Required: 1. Compute the materials price and quantity variances for the month. 2. Compute the labor rate and efficiency variances for the month. (For all requirements, Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Round your intermediate calculations to the nearest whole dollar.) 1. Materials price variance 1. Materials quantity variance 2. Labor rate variance 2. Labor efficiency variance
Chapter1: Financial Statements And Business Decisions
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Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
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Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
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Transcribed Image Text:### Analyzing Direct Material and Direct Labor Standards for Huron Company
Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below:
| Standard Quantity or Hours | Standard Price or Rate | Standard Cost |
|----------------------------|------------------------|--------------------|
| Direct materials: 7.50 pounds | $2.40 per pound | $18.00 |
| Direct labor: 0.80 hours | $7.00 per hour | $5.60 |
#### Recent Production Activity
During the most recent month, the following activity was recorded:
a. 13,250.00 pounds of material were purchased at a cost of $2.20 per pound.
b. All of the material purchased was used to produce 1,500 units of Zoom.
c. 1,000 hours of direct labor time were recorded at a total labor cost of $9,000.
#### Requirements
1. **Calculate the Materials Price and Quantity Variances for the Month.**
2. **Calculate the Labor Rate and Efficiency Variances for the Month.**
3. For all requirements, indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Round your intermediate calculations to the nearest whole dollar.
| Variance Type | Calculation Details |
|---------------------------------|---------------------|
| 1. Materials price variance | |
| 1. Materials quantity variance | |
| 2. Labor rate variance | |
| 2. Labor efficiency variance | |
**Note**: This document outlines basic information and requirements for determining variances in direct materials and labor, providing insights into cost management and efficiency for the company's production standards.
For more in-depth studies and additional problem sets, please refer to the relevant chapters in your educational materials or contact your instructor.
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