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Variance Analysis for Materials and Labour Costs

Based on the following:

Direct materials:
Standard price per pound: $9
Actual price per pound: $8
Price variance: $20,000 F
Total of direct-material variances: $2,000 F

Direct labor:
Actual hours worked: 40,000
Actual rate per hour: $15
Efficiency variance: $28,000 F
Total of direct-labor variances: $12,000 U

Units Completed: 12,000

Compute

a. actual materials used
b. materials quantity variance
c. labor rate variance
d. standard labor rate per hour
e. standard labor time per finished unit

Solution Preview

Based on the following:

Direct materials:
Standard price per pound: $9
Actual price per pound: $8
Price variance: $20,000 F = AQ*SP - AQ*AP
Total of direct-material variances: $2,000 F

Direct labor:
Actual hours worked: 40,000
Actual rate per hour: $15
Efficiency variance: $28,000 F
Total of direct-labor variances: $12,000 ...

Solution Summary

The solution computes the labour and material costs.

$2.19