Calculation of Variance
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During June, Danby Company's material purchases amounted to 6,000 pounds at a price of $7.30 per pound. Actual costs incurred in the production of 2,000 units were as follows:
Direct labor: $116,745 ($18.10 per hour)
Direct material: $30,660 ($7.30 per pound)
The standards for one unit of danby Company's product are as follows:
Direct labor: Direct Material:
Quantity, 3 hours per unit Quantity, 2 pounds per unit
Rate,$18 per hour Price, $7 per pound
Required: Compute the direct-material price and quantity variance and the direct-labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.
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Education
- BE, Bangalore University, India
- MS, University of Wisconsin-Madison
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