QQuestionAccounting
QuestionAccounting
Demizio Valley Orchards, Inc. (DVO), developed standard costs for direct material and direct labor. In 2015, DVO estimated the following standard costs for one of their most well loved products, the DVO classic Grandma's large apple pie which had a brown sugar coating on the top of the crust as well as including cranberry and mince ingredients in addition to the apples.
Budgeted quantity Budgeted price
Direct materials 2.0 pounds $6.25 per pound
Direct labor 0.20 hours $13.00 per hour
During September, DVO produced and sold 1,100 pies using 2,100 pounds of direct materials at an average cost per pound of $6.00 and 200 direct labor hours at an average wage of $13.50 per hour.
a) The direct material price variance during September is ?
b) The direct material efficiency variance during September is ?
c) The direct labor price variance during September is ?
d) The direct labor efficiency variance during September is ?
5 months agoReport content
Answer
Full Solution Locked
Sign in to view the complete step-by-step solution and unlock all study resources.
Step 1
= $12,600 - $13,125
To calculate the direct material price variance, we first find the actual cost of direct materials used and subtract the budgeted cost of direct materials that should have been used. The budgeted cost is calculated as the budgeted quantity multiplied by the budgeted price. Direct material price variance = (Actual quantity * Actual price) - (Actual quantity * Budgeted price) Actual quantity = 2,100 pounds (given) Actual price = $6.00 per pound (given) Budgeted price = $6.25 per pound (given) Budgeted cost = Actual quantity * Budgeted price = 2,100 pounds * $6.25 /pound = $13,125 Now, we can calculate the direct material price variance: = -$525
Final Answer
2. To calculate the direct material efficiency variance, we first find the actual quantity of direct materials that should have been used and subtract the actual quantity used. The actual quantity that should have been used is calculated as the actual quantity of pies produced multiplied by the budgeted quantity of direct materials per pie. Direct material efficiency variance = (Actual quantity of pies * Budgeted quantity per pie) - (Actual quantity of direct materials used) Actual quantity of pies = 1,100 pies (given) Budgeted quantity per pie = 2.0 pounds/pie (given) Actual quantity of direct materials used = 2,100 pounds (given) Now, we can calculate the direct material efficiency variance: Direct material efficiency variance = (1,100 pies * 2.0 pounds/pie) - 2,100 pounds = 2,200 pounds - 2,100 pounds = 100 pounds 3. To calculate the direct labor price variance, we first find the actual cost of direct labor used and subtract the budgeted cost of direct labor that should have been used. The budgeted cost is calculated as the budgeted quantity multiplied by the budgeted price. Direct labor price variance = (Actual quantity * Actual price) - (Actual quantity * Budgeted price) Actual quantity = 200 hours (given) Actual price = $13.50 /hour (given) Budgeted price = $13.00 /hour (given) Budgeted cost = Actual quantity * Budgeted price = 200 hours * $13.00 /hour = $2,600 Now, we can calculate the direct labor price variance: Direct labor price variance = ($13.50 /hour * 200 hours) - $2,600 = $2,700 - $2,600 = $100 4. To calculate the direct labor efficiency variance, we first find the actual quantity of direct labor that should have been used and subtract the actual quantity used. The actual quantity that should have been used is calculated as the actual quantity of pies produced multiplied by the budgeted quantity of direct labor per pie. Direct labor efficiency variance = (Actual quantity of pies * Budgeted quantity per pie) - (Actual quantity of direct labor used) Actual quantity of pies = 1,100 pies (given) Budgeted quantity per pie = 0.20 hours/pie (given) Actual quantity of direct labor used = 200 hours (given) Now, we can calculate the direct labor efficiency variance: Direct labor efficiency variance = (1,100 pies * 0.20 hours/pie) - 200 hours = 220 hours - 200 hours = 20 hours
Need Help with Homework?
Stuck on a difficult problem? We've got you covered:
- Post your question or upload an image
- Get instant step-by-step solutions
- Learn from our AI and community of students