Sunland Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product.

Direct materials (9 pounds at $1.90 per pound) $17.10

Direct labor (4 hours at $10.00 per hour) $40.00

During the month of April, the company manufactures 160 units and incurs the following actual costs.

Direct materials purchased and used (2,100 pounds) $4,410

Direct labor (680 hours) $6,664

Required:

Compute the total, price, and quantity variances for materials and labor.

Answer and Explanation:

The computation of total, price, and quantity variances for materials and labor is shown below:-

Total materials variance = Total Materials cost as per standard - Total cost of materials actual

= (160 * 9 * $1.90) - $4,410

= $2,736 - 4410

= - $1,674 Unfavorable

Materials price variance = Actual quantity at Standard price - Actual quantity at Actual price

= (2100 pounds * $1.90) - (2100 * $4,100 : 2,100)

= (2100 pounds * $1.90) - (2100 * $2.10)

= 3990 - 4410

= - $420 Unfavorable

Materials quantity variance = Standard quantity at Standard price - Actual quantity at Standard price

= (160 * 9 * $1.90) - (2100 * 1.90)

= - $1254 Unfavorable

Total Labor variance = Total Labor cost as per standard - Total cost of Labor actual

= (160 * 4 * $10) - $6,664

= $6,400 - $6,664

= - $264 Unfavorable

Labor price variance = Actual hours at Standard rate - Actual hours at Actual rate

= (680 * $10) - (680 * $9.80)

= $6,800 - $6,664

= $136 Favorable

Labor quantity variance = Standard hours at Standard rate - Actual hours at Standard rate

= (160 * 4 * $10) - (680 * $10)

= - $400 Unfavorable