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# variance analysis.

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1. Pharout Company uses a standard cost system. Job 822 is for the manufacturing of 500 units of the product P521. The company's standards for one unit of product P521 are as follows:

Quantity Price
Direct material 5 ounces \$2 per ounce
Direct labor 2 hours \$10 per hour

The job required 2,800 ounces of raw material costing \$5,880. An unfavorable labor rate variance of \$250 and a favorable labor efficiency variace of \$100 also were determined for this job.

A. Determine the direct material price variance for job 822 based on the actual quantity of materials used.

B. Determine the direct material quantity variance for job 822

C. Determine the actual quantity of direct labor hours used on job 822 based on the actual quantity of materials used

D. Determine the actual labor cost incurred for job 822

2. Standard costs versus actual costs for materials. Assembly of product P13 requires one unit of component X, two units of component Y, and three units of component Z. Job J372 produced 220 units of P13. The following information pertains to material variances for this job analyzed by component.

x y z
Price variance 160U 120F 192U
Quantity variance 168U 100U 84F

The actual material prices were 0.30 more, \$0.20 less, and \$0.50 more per unit for components X, Y, and Z, respectively, than their standard material prices per unit.

A. Determine the number of materials units consumed of each type of component.
B. Determine the standard materials price per unit of each type of component.

#### Solution Preview

Pharout Company
DATA
Production 500 Units
Quantity Price
Direct material 5 ounces \$2 per ounce
Direct labor 2 Hour \$10 per hour

Actual Quantity
Direct material 2800 ounces \$5,880
Variance
Labor rate variance \$250 Unfavorable
Labor efficiency variance \$100 Favorable
A. Determine the direct material price variance for job 822 based on the actual quantity of materials used.
Actual price per ounce = Total cost of purchase /actual quantity =\$5880/2800 = \$2.10
Material price variance= Actual quantity*( actual price per ounce-standard price per ounce)
2800*(\$2.10 -2)
\$280 Unfavorable

B. Determine the direct material quantity ...

#### Solution Summary

Excel file contains calculations and formulas of direct material quantity variance ,the actual quantity of direct labor hours the actual labor cost incurred .

\$2.19