# The Davenport Company-'s budget containns these standards for material.docx

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The Davenport Company\'s budget containns these standards for materials and direct labor for one unit of output: Material: 5 pounds @ \$1 per pound \$ 5.00 Labor: 2 hours @ \$10 per hour 20.00 Actual production for te month recently ended was 3000 units. Materials weighing 16,000 pounds were purchased for \$18,400. Materials weighing 15,500 were used in production. Direct labor costs totaled \$66,150 for 6,750 hours. Required: Calculate the following variances: 1.Materials price variance 2. Materials usage/quantity variance 3. Labor rate variance 4. Labor efficiency variance Solution Hi, Please find the detailed answer as follows: Direct Material Price Variance = Actual Quantity *(Actual Rate - Standard Rate) = 16000*(18400/16000 - 1) = 2400 (Unfavorable) Direct Material Quantity Variance = Standard Rate*(Actual Quantity - Standard Quantity used for Actual Production) = 1*(16000 - 3000*5) = 1000 (Unfavorable) Labor Rate Variance = Actual Hours *(Actual Rate - Standard Rate) = 6750*(66150/6750 - 10) = 1350 (Favorable). You will be required to enter -1350. Labor Efficiency Variance = Standard Rate*(Actual Hours - Standard Hours used for Actual Production) = 10*(6750 - 3000*2) = 7500 (Unfavorable) Thanks. .

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### The Davenport Company-'s budget containns these standards for material.docx

• 1. The Davenport Company's budget containns these standards for materials and direct labor for one unit of output: Material: 5 pounds @ \$1 per pound \$ 5.00 Labor: 2 hours @ \$10 per hour 20.00 Actual production for te month recently ended was 3000 units. Materials weighing 16,000 pounds were purchased for \$18,400. Materials weighing 15,500 were used in production. Direct labor costs totaled \$66,150 for 6,750 hours. Required: Calculate the following variances: 1.Materials price variance 2. Materials usage/quantity variance 3. Labor rate variance 4. Labor efficiency variance Solution Hi, Please find the detailed answer as follows: Direct Material Price Variance = Actual Quantity *(Actual Rate - Standard Rate) = 16000*(18400/16000 - 1) = 2400 (Unfavorable)
• 2. Direct Material Quantity Variance = Standard Rate*(Actual Quantity - Standard Quantity used for Actual Production) = 1*(16000 - 3000*5) = 1000 (Unfavorable) Labor Rate Variance = Actual Hours *(Actual Rate - Standard Rate) = 6750*(66150/6750 - 10) = 1350 (Favorable). You will be required to enter -1350. Labor Efficiency Variance = Standard Rate*(Actual Hours - Standard Hours used for Actual Production) = 10*(6750 - 3000*2) = 7500 (Unfavorable) Thanks.
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