The following actual and standard cost data for direct material and direct labor relate to the production of 4,000 units of product: Actual Cost Standard Cost
Direct material 3,900 lbs. $5.30 4,000 lbs. $5.10
Direct labor 6,200 hrs, $8.40 6,000 hrs. $8.70
Determine the following variances:
Materials Variances
Actual cost:
Split cost:
Standard cost:
A. Materials price
B. Materials efficiency
Labor Variances
Actual cost:
Split cost:
Standard cost:
C. Labor rate
D. Labor efficiency

Instructions are below.

Explanation:

Giving the following information:

Production= 4,000 units

Actual Cost Standard Cost

Direct material 3,900 lbs. $5.30 4,000 lbs. $5.10

Direct labor 6,200 hrs, $8.40 6,000 hrs. $8.70

To calculate the direct material price and efficiency variance, we need to use the following formulas:

Direct material price variance= (standard price - actual price)*actual quantity

Direct material price variance= (5.3 - 5.1)*4,000

Direct material price variance= $800 favorable

Direct material quantity variance= (standard quantity - actual quantity)*standard price

Direct material quantity variance= (3,900 - 4,000)*5.3

Direct material quantity variance= $530 unfavorable

To calculate the direct labor efficiency and rate variance, we need to use the following formulas:

Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate

Direct labor time (efficiency) variance= (6,200 - 6,000)*8.4

Direct labor time (efficiency) variance= $1,680 favorable

Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity

Direct labor rate variance= (8.4 - 8.7)*6,000

Direct labor rate variance= $1,800 unfavorable

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