Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below: Standard Quantity or Hours Standard Price or Rate Standard Cost Direct materials 5.5 pounds $ 2.50 per pound $ 13.75 Direct labor 0.5 hours $ 6.50 per hour $ 3.25 During the most recent month, the following activity was recorded: a. Ten thousand six hundred pounds of material were purchased at a cost of $2.40 per pound. b. The company produced only 1,060 units, using 9,540 pounds of material. (The rest of the material purchased remained in raw materials inventory.) c. Six hundred and thirty hours of direct labor time were recorded at a total labor cost of $7,560.

Question

Monserrat Harrison

Business

3 February, 02:49

Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below: Standard Quantity or Hours Standard Price or Rate Standard Cost Direct materials 5.5 pounds $ 2.50 per pound $ 13.75 Direct labor 0.5 hours $ 6.50 per hour $ 3.25 During the most recent month, the following activity was recorded: a. Ten thousand six hundred pounds of material were purchased at a cost of $2.40 per pound. b. The company produced only 1,060 units, using 9,540 pounds of material. (The rest of the material purchased remained in raw materials inventory.) c. Six hundred and thirty hours of direct labor time were recorded at a total labor cost of $7,560.

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Answers (1)

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Zane · Answer 1

Material price variance = $954 favorable

Material quantity variance = $9,275 unfavorable

Explanation:

The computation is shown below:

Material price variance

= Actual Quantity * (Standard Price - Actual Price)

= 9,540 pounds of material * ($2.5 - $2.4)

= 9,540 pounds of material * $0.11

= $954 favorable

Material quantity variance

= Standard Price * (Standard Quantity - Actual Quantity)

= $2.5 * (1,060 units * 5.5 pounds - 9,540)

= $2.5 * (5,830 - 9,540)

= $2.5 * 3,710

= $9,275 unfavorable