# compute the direct materials quantity and price variances and explain their significance, and compute the direct labor efficiency and rate variances and explain their significance

## Project Description:

landers company manufactures a number of products. the standards relating to one of these products are shown below, along with actual cost data for may.

standard cost per unit actual cost per unit
direct materials:
standard: 1.40 feet at \$3.00 per foot \$ 4.20
actual: 1.35 feet at \$3.20 per foot \$ 4.32
direct labor:
standard: 0.80 hours at \$16.00 per hour 12.80
actual: 0.85 hours at \$15.40 per hour 13.09
standard: 0.80 hours at \$4.00 per hour 3.20
actual: 0.85 hours at \$3.60 per hour 3.06

total cost per unit \$ 20.20 \$ 20.47

excess of actual cost over standard cost per unit \$ 0.27

the production superintendent was pleased when he saw this report and commented: "this \$0.27 excess cost is well within the 1 percent limit management has set for acceptable variances. it's obvious that there's not much to worry about with this product."

actual production for the month was 11,000 units. variable overhead cost is assigned to products on the basis of direct labor-hours. there were no beginning or ending inventories of materials.

required:
1. compute the following variances for may:

a.
materials price and quantity variances. (input all amounts as positive values. leave no cells blank - be certain to enter "0" wherever required. indicate the effect of each variance by selecting "f" for favorable, "u" for unfavorable, and "none" for no effect (i.e., zero variance). omit the "\$" sign in your response.)

materials price variance \$----------------
materials quantity variance \$-----------------

b.
labor rate and efficiency variances. (input all amounts as positive values. leave no cells blank - be certain to enter "0" wherever required. indicate the effect of each variance by selecting "f" for favorable, "u" for unfavorable, and "none" for no effect (i.e., zero variance). omit the "\$" sign in your response.)

labor rate variance \$ ------------------------
labor efficiency variance \$---------------------

c.
variable overhead rate and efficiency variances. (input all amounts as positive values. leave no cells blank - be certain to enter "0" wherever required. indicate the effect of each variance by selecting "f" for favorable, "u" for unfavorable, and "none" for no effect (i.e., zero variance). omit the "\$" sign in your response.)

2.
how much of the \$0.27 excess unit cost is traceable to each of the variances computed in (1) above. (input all amounts as positive values. leave no cells blank - be certain to enter "0" wherever required. round your answers to 2 decimal places. indicate the effect of each variance by selecting "f" for favorable, "u" for unfavorable, and "none" for no effect (i.e., zero variance). omit the "\$" sign in your response.)

materials:
quantity variance \$-----------------------------
price variance \$------------------------

labor:----------------
efficiency variance-----------------
rate variance----------------------

efficiency variance------------------
rate variance-----------------------

excess of actual over standard cost per unit \$-------------

3.
how much of the \$0.27 excess unit cost is traceable to apparent inefficient use of labor time? (input all amounts as positive values. leave no cells blank - be certain to enter "0" wherever required. do not round intermediate calculations. round your answers to 2 decimal places. indicate the effect of each variance by selecting "f" for favorable, "u" for unfavorable, and "none" for no effect (i.e., zero variance). omit the "\$" sign in your response.)

excess of actual over standard cost per unit \$ -------------------
less portion attributable to labor inefficiency:
labor efficiency variance -------------

portion due to other variances \$ ---------------------
Skills Required:
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Price Type: Negotiable

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