Lucia Company has set the following standard cost per unit for direct materials and direct labor. $ 60 Direct materials (15 pounds @ $4 per pound) Direct labor (4 hours @ $16 per hour) 64 During May the company incurred the following actual costs to produce 8,200 units. Direct materials (125,000 pounds @ $3.80 per pound) Direct labor (36,900 hours @ $16.10 per hour) AR = Actual Rate SR = Standard Rate AQ Actual Quantity SQ Standard Quantity AP = Actual Price SP = Standard Price $ 475,000 594,090 (1) Compute the direct materials price and quantity variances. (2) Compute the direct labor rate variance and the direct labor efficiency variance.
Lucia Company has set the following standard cost per unit for direct materials and direct labor. $ 60 Direct materials (15 pounds @ $4 per pound) Direct labor (4 hours @ $16 per hour) 64 During May the company incurred the following actual costs to produce 8,200 units. Direct materials (125,000 pounds @ $3.80 per pound) Direct labor (36,900 hours @ $16.10 per hour) AR = Actual Rate SR = Standard Rate AQ Actual Quantity SQ Standard Quantity AP = Actual Price SP = Standard Price $ 475,000 594,090 (1) Compute the direct materials price and quantity variances. (2) Compute the direct labor rate variance and the direct labor efficiency variance.
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:Exercise 21-11 (Algo) Direct materials and direct labor variances LO P3
Lucia Company has set the following standard cost per unit for direct materials and direct labor.
Direct materials (15 pounds @ $4 per pound)
Direct labor (4 hours @ $16 per hour)
During May the company incurred the following actual costs to produce 8,200 units.
Direct materials (125,000 pounds @ $3.80 per pound)
Direct labor (36,900 hours @ $16.10 per hour)
AR Actual Rate
SR Standard Rate
AQ = Actual Quantity
SQ = Standard Quantity
AP = Actual Price
SP = Standard Price
(1) Compute the direct materials price and quantity variances.
(2) Compute the direct labor rate variance and the direct labor efficiency variance.
Required 1 Required 2
Complete this question by entering your answers in the tabs below.
Actual Cost
Compute the direct materials price and quantity variances. (Indicate the effect of each variance by selecting favorable, unfavorable, or no varianc
$
$ 60
64
0
$
$ 475,000
594,090
0
0
< Required 1
$
0
Required 2 >
Standard Cost
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