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Question

Huron Company produces a commercial cleaning compound known asZoom. The direct materials and direct labor standards for one unitof Zoom are given below:

Standard Quantity or Hours Standard Price or Rate StandardCost

Direct materials   4.6pounds $ 2.50 per pound   $ 11.50

Direct labor 0.2 hours $ 12.00 per hour $ 2.40

During the most recent month, the following activity wasrecorded:

a. Twenty thousand pounds of material were purchased at a costof $2.35 per pound.

b. The company produced only 3,000 units, using 14,750 pounds ofmaterial. (The rest of the material purchased remained in rawmaterials inventory.)

c. 750 hours of direct labor time were recorded at a total laborcost of $10,425.

Required: Compute the materials price and quantity variances forthe month. (Indicate the effect of each variance by selecting "F"for favorable, "U" for unfavorable, and "None" for no effect (i.e.,zero variance).)

Solution

xxxxx xxxxxxxx = xx(xx-xx)AQ = xx,xxxxx = $x.xxSP = $x.xxxxxx Variance = 20,000($2.35-$2.5) =$x,xxx (x)Quantity xxxxxxxx = xx (xx-xx)xx = $x.xAQ = xx,xxxxx = xxxx * x.x = xx,xxxQuantity xxxxxxxx = $x.x (xx,xxx-xx,xxx) =$x,xxx (U)

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