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# Calculating Material and Labor Variances

Calculating Material and Labor Variances
Star Band Uniforms uses a standard costing system. The standard material and labor costs for producing a marching band hat is as follows:

Materials (0.70 yards × \$10.00) \$7.00
Direct labor (0.80 hours × \$12.50) \$10.0

During May, the company produced 3,000 band hats; 3,500 yards of material were purchased for \$31,850, and 2,600 yards of material were used in production. Also during May, 3,100 direct labor hours were worked at a cost of \$41,850. Calculate material price and quantity variances and labor rate and efficiency variances. Indicate whether the variances are favorable or unfavorable. (If answer is negative, put amount in parenthesis.)

Material Price Variance \$ UnfavorableorFavorable
Material Quantity Variance \$ UnfavorableorFavorable
Labor Rate Variance \$ FavorableorUnfavorable
Labor Efficiency Variance \$ FavorableorUnfavorable

#### Solution Preview

Dear student,
Solution to your problem is provided in a separate excel file attached.Necessary verification is also provided along with working notes.

Direct Material Variances:

Direct material variance represents the differece between standarad cost of material for actual out put and actual cost of material for actual output

It is classified as : (1) Material price Variance (2) Material Quantity variance (3) Material mix variance etc