E11-8

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

AN following direct materials and direct labor data pertain to the operations of Laurel Company for the month of August.

Costs

Quantities

Actual labor rate

$13 per hour

Actual hours incurred and used

4,150 hours

Actual materials price

$128 per ton

Actual quantity of materials purchased and used

1,220 tons

Standard labor rate

$12.50 per hour

Standard hours used

4,300 hours

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 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.