Controller Tri Nuygen is analyzing the direct material and direct labor variances for June. The following information
Question:
Controller Tri Nuygen is analyzing the direct material and direct labor variances for June. The following information comes from the accounting records. The product is a reinforcement bar used in construction.
Direct material cost for 575,000 lbs of material
$172,500
Pounds used in production
550,000 lbs
Direct labor costs for 230,000 hours
$4,140,000
Units produced
900,000
The standard cost for one bar is:
Direct materials: 0.5 lbs at $0.25 per lb
Direct labor 0.25 hours at $20 per hour
Required: Calculate (a) the direct-material price variance, the (b) direct-material quantity variance, (c) the direct-labor rate variance, and (d) the direct-labor efficiency variance.
Compute the following variances for June, and tell if they are favorable or unfavorable.
Amount Favorable/unfavorable
- (a) Direct-material price variance ____________________ __________________
- (b) Direct-material quantity variance ____________________ __________________
- (c) Direct-labor rate variance ____________________ __________________
Financial Accounting A User Perspective
ISBN: 978-0470676608
6th Canadian Edition
Authors: Robert E Hoskin, Maureen R Fizzell, Donald C Cherry