# Question

Amber Company produces iron table and chair sets. During October, Amber’s costs were as follows:

Actual purchase price ......... $ 2.30 per lb.

Actual direct labor rate .......... $ 7.50 per hour

Standard purchase price ......... $ 2.10 per lb.

Standard quantity for sets produced .... 970,000 lbs.

Standard direct labor hours allowed .... 11,000

Actual quantity purchased in October .... 1,115,000 lbs.

Actual direct labor hours ......... 10,000

Actual quantity used in October ...... 1,000,000 lbs.

Direct labor rate variance ........ $5,500 F

Required:

1. Calculate the total cost of purchases for October.

2. Compute the direct materials price variance based on quantity purchased.

3. Calculate the direct materials quantity variance based on quantity used.

4. Compute the standard direct labor rate for October.

5. Compute the direct labor efficiency variance for October.

Actual purchase price ......... $ 2.30 per lb.

Actual direct labor rate .......... $ 7.50 per hour

Standard purchase price ......... $ 2.10 per lb.

Standard quantity for sets produced .... 970,000 lbs.

Standard direct labor hours allowed .... 11,000

Actual quantity purchased in October .... 1,115,000 lbs.

Actual direct labor hours ......... 10,000

Actual quantity used in October ...... 1,000,000 lbs.

Direct labor rate variance ........ $5,500 F

Required:

1. Calculate the total cost of purchases for October.

2. Compute the direct materials price variance based on quantity purchased.

3. Calculate the direct materials quantity variance based on quantity used.

4. Compute the standard direct labor rate for October.

5. Compute the direct labor efficiency variance for October.

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