Direct Material Price and Quantity and Direct Labor Rate and Efficiency
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PROBLEM 3
Arrow Industries employs a standard cost system in which direct materials inventory is carried at standard cost. Arrow has established the following standards for the prime costs of one unit of product.
Standard Standard Standard
Quantity Price Cost
Direct material 8 pounds $ 1.80/pound $ 14.40
Direct labor .25 hour $ 8.00/hour 2.00
$ 16.40
During November, Arrow purchased 160,000 pounds of direct material at a total cost of $ 304,000. The total factory wages for November were $ 42,000, 90 percent of which were for direct labor. Arrow manufactured 19,000 units of product during November using 142,500 pounds of direct material and 5,000 direct labor hours.
a) The total direct material price variance for November is:
b) The total direct material quantity variance for November is:
c) The total direct labor rate variance for November is:
d) The total direct labor efficiency variance for November is:?
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Solution Summary
This solution answers questions regarding direct material price and quantity and direct labor rate and efficiency.
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Materials purchased
160,000 pounds of direct material for $304,000 = $0.53 / pound
Factory wages
$42,900 - 90% direct labor = $38,610
Manufactured
19,000 units using 142,500 pounds material and 5,000 direct labor hours
Labor
Standard ...
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