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22 February, 22:22

During May, Joliet Fabrics Corporation manufactured 600 units of a special multilayer fabric with the trade name Stylex. The following information from the Stylex production department also pertains to May. Direct material purchased: 19,000 yards at $1.48 per yard $ 28,120 Direct material used: 10,500 yards at $1.48 per yard 15,540 Direct labor: 3,100 hours at $9.25 per hour 28,675 The standard prime costs for one unit of Stylex are as follows: Direct material: 20 yards at $1.45 per yard $ 29.00 Direct labor: 5 hours at $8.00 per hour 40.00 Total standard prime cost per unit of output $ 69.00. Required: Compute the following variances for the month of May.

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  1. 22 February, 22:32
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    Direct labour rate variance = (3875) unfavourable, Direct labour efficiency rate = (800) unfavourable

    Explanation:

    Computation of Direct Material Price & Quantity Variance

    Direct Material Purchase - Price variance = (SP minus AP) multiply AQ Purchase ($1.45 minus $1.48) multiply19000 = ($570) Unfavourable

    Direc Material Quantity Variance = (SQ-AQ) SP =

    ((20 multiply600) - 10500) multiply$1.45 = $2,175 Favourable

    Direct Material Price variance - (SP minus AP) AQ Used = ($1.45minus $1.48) multiply10500 = ($315) Unfavourable

    Computation of Direct Labour Rate & Efficiency Variance

    Direct Labour Rate variance = (SR minus AR) multiply AH

    = ($8 minus $9.25) multiply3100 = - 3875 Un Favourable

    Direct Labour Efficiency Variance (SH minus AH) multiply SR

    = ((5 multiply 600) minus 3100) multiply8) = - 800 Un Favourable
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