The following information describes production activities of Mercer Manufacturing for the year
Actual direct materials used 33,000 lbs. at $5.90 per lb
Actual direct labor used 10,700 hours for a total of $221,490
Actual units produced 63,000
Budgeted standards for each unit produced e 0.50 pounds of direct material at $5.85 per pound and 10 minutes of direct labor at $21.70 per hour
AQ = Actual Quantity
SQ Standard Quantity
AP Actual Price
SP = Standard Price
AH = Actual Hours
SH = Standard Hours AR Actual Rate
SR = Standard Rate
(1) Compute the direct materials price and quantity variances
(2) Compute the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable

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ayokenny2001 ayokenny2001 · Answer 1 · 2021-05-03T02:30:36+02:00

Answer:

See below

Explanation:

1a. Direct material price variance

= (Standard price - Actual price) × Actual quantity

= ( $5.85 - $5.90) × 33,000

= $1,650 unfavorable

1.b Direct materials quantity variance

= (Standard quantity - Actual quantity) × Standard price

= (63,000 × 0.5 - 33,000) × $5.85

= $8,775 unfavourable

2.a Direct labor rate variance

= (Standard rate - Actual rate) × Actual quantity

= ($21.70 - $20.7) × 10,700

= $10,700 favorable

2.b Direct labor efficiency variance

= (Standard quantity - Actual quantity) × Standard rate)

= [(10/60 × 63,000) - 10,700] × $21.7

= (10,500 - 10,700) × $21.7

= $4,340 unfavorable