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Total, price, and quantity variances for materials and labor

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E8-5 The following direct materials and direct labor data pertain to the operations of
Juan Manufacturing Company for the month of August.

Costs Quantities
Actual labor rate $13.00 per hour Actual hours Incurred 4,200 hours
and used
Actual materials $128 per ton Actual quantity of materials 1,230 tons
price purchases and used

Standard labor rate $12.00 per hour Standard hours used 4,300 hours

Standard materials $130.00 per ton Standard Quantity of 1,200 tons
price materials used

Instructions
Compute the total, price, and quantity variances for materials and labor.
Provide two possible explanations for each of the unfavorable variances
calculated above, and suggest where responsibility for the unfavorable result
might be placed.
Compute the materials and labor variances and list reasons for unfavorable variances.
Objective 4 Study Objective 6)

Excel Template

(a) Total materials variance:
$157,440 -$156,000 = $x,440 U
(1,xxx X $xxx) (1,xxx X $xxx)

Materials price variance:
$157,440 - $159,900
(1,xxx X $xxx) (1,xxx X $xxx) = $x,460 F

Materials quantity variance:
$159,900 - $156,000
(1,xxx X $xxx) (1,200 ( X $130) = $x,900 U

Total labor variance:
$54,xxx - $xx,600
(x,200 X $xx) (x,300 X $xx) = $x,000 U

Labor price variance:
$xx,600 - $xx,400
(x,x00 X $xx) (x,x00 X $xx) = $x,200 U

Labor quantity variance:
$xx,400 - $xx,600
(x,200 X $xx) (x,300 X $xx)= $x,x00 F

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E8-5 The following direct materials and direct labor data pertain to the operations of
Juan Manufacturing Company for the month of August.

Costs Quantities
Actual labor rate $13.00 per hour Actual hours Incurred 4,200 hours
and used
Actual materials $128 per ton Actual quantity of materials 1,230 tons
price ...

Solution Summary

This explains the total, price, and quantity variances for materials and labor with examples

$2.19
See Also This Related BrainMass Solution

Compute the materials and labor variances and list reasons for unfavorable variances

The following direct materials and direct labor data pertain to the operations of Batista Manufacturing Company for the month of August.

Costs Quantities
Actual labor rate $13 per hour Actual hours incurred and used 4,250 hours
Actual materials Actual quantity of materials
price $128 per ton purchased and used 1,250 tons
Standard
materials price $130 per ton Standard quantity of
materials used 1,200 tons

Instructions:

a. Compute the total, price, and quantity variances for materials used and labor.
b. Provide two possible explanations for each of the unfavorable variances calculated above, and suggest where responsibility for the unfavorable result might be placed.

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