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: Direct materials Direct labor Standard Standard Quantity Price or or Hours Rate 7.80 0.30 Standard Cost pounds $2.50 hours $6.00 per $ pound 19.50 per $ hour During the most recent month, the following activity was recorded: 9,300.00 pounds of material were purchased at a cost of $2.20 per pound. All of the material purchased was used to produce 1,000 units of Zoom. 2. Compute the labor rate and efficiency variances for the month. 200 hours of direct labor time were recorded at a total labor cost of $1,400. Required: 1. Compute the materials price and quantity variances for the month. 1.80
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: Direct materials Direct labor Standard Standard Quantity Price or or Hours Rate 7.80 0.30 Standard Cost pounds $2.50 hours $6.00 per $ pound 19.50 per $ hour During the most recent month, the following activity was recorded: 9,300.00 pounds of material were purchased at a cost of $2.20 per pound. All of the material purchased was used to produce 1,000 units of Zoom. 2. Compute the labor rate and efficiency variances for the month. 200 hours of direct labor time were recorded at a total labor cost of $1,400. Required: 1. Compute the materials price and quantity variances for the month. 1.80
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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: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:
Direct
materials
Direct
labor
Standard Standard
Quantity Price or
or Hours
Rate
7.80
0.30
Standard
Cost
pounds $2.50
hours $ 6.00
per
$
pound 19.50
per
hour
During the most recent month, the following
activity was recorded:
9,300.00 pounds of material were purchased at
a cost of $2.20 per pound.
All of the material purchased was used to
produce 1,000 units of Zoom.
2. Compute the labor rate and efficiency
variances for the month.
200 hours of direct labor time were recorded at
a total labor cost of $1,400.
Required:
1. Compute the materials price and quantity
variances for the month.
$
1.80
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