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9 December, 23:06

Sunland Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product.

Direct materials (9 pounds at $1.90 per pound) $17.10

Direct labor (4 hours at $10.00 per hour) $40.00

During the month of April, the company manufactures 160 units and incurs the following actual costs.

Direct materials purchased and used (2,100 pounds) $4,410

Direct labor (680 hours) $6,664

Required:

Compute the total, price, and quantity variances for materials and labor.

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Answers (1)
  1. 10 December, 02:40
    0
    Answer and Explanation:

    The computation of total, price, and quantity variances for materials and labor is shown below:-

    Total materials variance = Total Materials cost as per standard - Total cost of materials actual

    = (160 * 9 * $1.90) - $4,410

    = $2,736 - 4410

    = - $1,674 Unfavorable

    Materials price variance = Actual quantity at Standard price - Actual quantity at Actual price

    = (2100 pounds * $1.90) - (2100 * $4,100 : 2,100)

    = (2100 pounds * $1.90) - (2100 * $2.10)

    = 3990 - 4410

    = - $420 Unfavorable

    Materials quantity variance = Standard quantity at Standard price - Actual quantity at Standard price

    = (160 * 9 * $1.90) - (2100 * 1.90)

    = - $1254 Unfavorable

    Total Labor variance = Total Labor cost as per standard - Total cost of Labor actual

    = (160 * 4 * $10) - $6,664

    = $6,400 - $6,664

    = - $264 Unfavorable

    Labor price variance = Actual hours at Standard rate - Actual hours at Actual rate

    = (680 * $10) - (680 * $9.80)

    = $6,800 - $6,664

    = $136 Favorable

    Labor quantity variance = Standard hours at Standard rate - Actual hours at Standard rate

    = (160 * 4 * $10) - (680 * $10)

    = - $400 Unfavorable
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