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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:
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 | 6.3 | pounds | $ | 2.50 | per pound | $ | 15.75 |
Direct labor | 0.5 | hours | $ | 10.50 | per hour | $ | 5.25 |
During the most recent month, the following activity was recorded: |
a. | Twelve thousand two hundred pounds of material were purchased at a cost of $2.40 per pound. |
b. | The company produced only 1,220 units, using 10,980 pounds of material. (The rest of the material purchased remained in raw materials inventory.) |
c. | Seven hundred and ten hours of direct labor time were recorded at a total labor cost of $8,520. |
Required: | |
Compute the materials price and quantity variances for the month. |
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