Actual direct materials cost $=$ $$1\mathrm{.}05$ per pound Standard direct materials cost $=$ $$1\mathrm{.}10$ per pound Actual quantity purchased and used $=2,000$ pounds Standard quantity that should have been used $=1,800$ pounds

Calculate:

a$)$ the direct materials cost variance and

b$)$ the direct materials efficiency variance

Show formulas and label each variance with a $ and U or F$.$ Use the following abbreviations:

AC $=$ Actual Cost

SC $=$ Standard Cost

AQ $=$ Actual Quantity

SQ $=$ Standard Quantity

U $=$ Unfavorable

F $=$ Favorable

a$)$

b$)$

$2)$ Given the following information:

Actual direct labor cost $=$ $$20\mathrm{.}00$ per hour Standard direct labor cost $=$ $$21\mathrm{.}00$ per hour Actual direct labor hours $=200$ hours Standard quantity of labor hours that should have been used $=180$ hours

Calculate:

a$)$ the direct labor cost variance

b$)$ the direct labor efficiency variance

Show formulas and label each variance with a $ and U or F$.$ Use the following abbreviations:

AC $=$ Actual Cost

SC $=$ Standard Cost

AQ $=$ Actual Quantity

SQ $=$ Standard Quantity

U $=$ Unfavorable

F $=$ Favorable

 

 $3)$ Which division$/$department manager would most likely be responsible for the following variances:  

 

Choose between the following divisions$/$departments: Human resources, purchasing, production, accounting

Workers were paid more than expected. $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Materials purchases were at a higher cost than standards.

$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Inexperienced workers caused delays in production.

$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

d$)$ Quantity of direct materials used was more than the standard allowed for the

number of units produced.

$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

$4)$ a$)$ Explain why purchasing lower cost materials could have a negative impact on the

the DM and DL efficiency variances even if the DM cost variance is favorable.

b$)$ Explain in words, why your answer to $2$b is U or F$.$ Do not include amounts in your

answer.