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# Variance Analysis for Materials and Labour Costs

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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.

\$2.49