Exercise 9-13 Direct Materials and Direct Labor Variances (LO9-4, LO9-5] 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 6.80 pounds 0.20 hours Standard Price or Rate $2.90 per pound $9.00 per hour Standard Cost $19.72 $ 1.80 Direct materials Direct labor During the most recent month, the following activity was recorded: a. Fifteen thousand one hundred pounds of material were purchased at a cost of $2.60 per pound. b. All of the material purchased was used to produce 2,000 units of Zoom. c. 300 hours of direct labor time were recorded at a total labor cost of $3,300. Required: 1. Compute the materials price and quantity variances for the month. 2. Compute the labor rate and efficiency variances for the month. (For all requirements, Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Round your intermediate calculations to the nearest whole dollar.) X Answer is complete but not entirely correct. 1. F Materials price variance Materials quantity variance $ 4,500 $ 4,060 U 2. Labor rate variance $ 2,100 Labor efficiency variance $ 900 F Via Gelato is a popular neighborhood gelato shop. The company has provided the following cost formulas and actual results for the month of June: Fixed Element per Month Revenue Raw materials Wages Utilities Rent Insurance Miscellaneous Variable Element per Liter $ 30.00 $ 6.45 $ 3.20 $ 2.00 $ 7,400 $ 3,430 $ 4,400 $ 3,150 $ 830 Actual Total for June $ 190,540 $ 42,930 $ 28, 400 $ 17,300 $ 4,400 $ 3,150 $ 14,390 $ 2.15 While gelato is sold by the cone or cup, the shop measures its activity in terms of the total number of liters of gelato sold. For example, wages should be $7,400 plus $3.20 per liter of gelato sold and the actual wages for June were $28,400. Via Gelato expected to sell 6,400 liters in June, but actually sold 6,600 liters. Required: Calculate Via Gelato revenue and spending variances for June. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Answer is not complete. Via Gelato Revenue and Spending Variances For the Month Ended June 30 $ Revenue 198,000 Expenses: Raw materials 42,570 X Wages Utilities Rent Insurance Miscellaneous Total expense Net operating income
