In order to get a better control over the amounts spent on direct materials and direct...

 

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In order to get a better control over the amounts spent on direct materials and direct labor, the company had previously implemented the following standards and achieved the corresponding results when 128,000 units were produced: Direct materials Direct labor Standards Each unit should have 1/8 pound of direct materials purchased at $0.26 per pound. Each unit should be produced in 21 seconds at a direct labor cost of $12 per hour. Actual Results Actual production used 19,700 pounds of direct materials at an average cost of $0.25 per pound. Actual production required 750 direct labor hours at an average cost of $12.50 per hour. Calculate the price and quantity variance for direct materials and direct labor; as needed, round final calculations (i.e. each variance) to the nearest whole dollar. In order to get a better control over the amounts spent on direct materials and direct labor, the company had previously implemented the following standards and achieved the corresponding results when 128,000 units were produced: Direct materials Direct labor Standards Each unit should have 1/8 pound of direct materials purchased at $0.26 per pound. Each unit should be produced in 21 seconds at a direct labor cost of $12 per hour. Actual Results Actual production used 19,700 pounds of direct materials at an average cost of $0.25 per pound. Actual production required 750 direct labor hours at an average cost of $12.50 per hour. Calculate the price and quantity variance for direct materials and direct labor; as needed, round final calculations (i.e. each variance) to the nearest whole dollar.

Answer rating: 100% (QA)

SOLUTION To calculate the price and quantity variances for direct materials and direct labor we will use the following formulas Direct Materials Price ... View the full answer