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# Solve: Material and Labor Variances

Sonne Company produces a perfume called Whim. The direct materials and direct labor standards for one bottle of Whim are given in a chart in the attached document.

During the most recent month, the following activity was recorded:
a. Twenty thousand ounces of material were purchased at a cost of \$2.40 per ounce.
b. All of the material was used to produce 2,500 bottles of Whim.
c. Nine hundred hours of direct labor time were recorded at a total labor cost of \$10,800.

Requirement 1:
Compute the direct materials price and quantity variance for the month. (Indicate the effect of the variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).Input all amounts as positive values. Omit the "\$" sign in your response.)

Materials price variance = ?
Materials quantity variance = ?

Requirement 2:
Compute the direct labor rate and efficiency variances for the month. (Indicate the effect of the variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).Input all amounts as positive values. Omit the "\$" sign in your response.)

Labor rate variance = ?

Labor efficiency variance = ?

#### Solution Preview

1.
Material price variance = (actual price – standard price) actual quantity purchased
= (2.40 – 2.5) 20,000 = \$2,000 F as actual ...

\$2.19