Robb Industries, Inc. (RII), developed standard costs for direct material and direct labor.
In 2004, RII estimated the following standard costs for one of their major products, the 10-gallon plastic container.
Budgeted quantity Budgeted price
Direct materials 0.10 pounds $30 per pound
Direct labor 0.05 hours $15 per hour
During June, RII produced and sold 5,000 containers using 490 pounds of direct materials at an average cost per pound of $32 and
250 direct manufacturing labor-hours at an average wage of $15.25 per hour.
a. What is June’s direct material price variance?
(sp-ap)*aq
standard price 30 acutal quantity 490
actual price 32 direct material 980 unfavorable
b. What is June’s direct material efficiency variance?
sp*(sq-aq)
standard price 30 actual quantity 490
standard quality 500 direct material 300 favorable
c. What is June’s direct labor rate variance?
(sr-ar)*ah
standard rate 15 actual hours 450
actual rate 15.25 manufactoring labor variance 62.50 unfavorable
d. What is June’s direct labor efficiency variance?
(sh-ah)*sr
standard hours 250 standard rate 15
actual hours 250 maunfaturing varience 0
A June’s direct material flexible-budget variance is:
- $680 unfavorable
Working notes for the above answer is as under
(490 x $32) – (5,000 x 0.10 x $30)
= 680 U
- June’s direct material price variance is:
- $980 unfavorable
Working notes for the above answer is as under
490 ($32 – $30) =
980 U
- June’s direct material efficiency variance is:
- $300 favorable
Working notes for the above answer is as under
$30 (490 – 500)
= 300 F
D June’s direct manufacturing labor price variance is:
- $62.50 unfavorable
Working notes for the above answer is as under
250 dlh ($15.25 – $15.00) =
$62.50 U
- June’s direct manufacturing labor efficiency variance is:
- None of these answers are correct.
Working notes for the above answer is as under
[250 dlh – (5,000 x 0.05)] x $15 = Zero
