Exercise 10-7 Direct Materials Variances [LO10-1]

Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below:

	Standard Quantity or Hours		Standard Price or Rate			Standard Cost
Direct materials	6.20	pounds	$	3.00	per pound	$	18.60
Direct labor	0.40	hours	$	10.00	per hour	$	4.00

During the most recent month, the following activity was recorded:

1. Twelve thousand pounds of material were purchased at a cost of $2.90 per pound.

2. The company produced only 1,200 units, using 10,800 pounds of material. (The rest of the material purchased remained in raw materials inventory.)

3. 580 hours of direct labor time were recorded at a total labor cost of $6,960.