Question
Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labour standards for one unit of Zoom follow: Standard Quantity
Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labour standards for one unit of Zoom follow:
Standard Quantity or Hours Standard Price or Rate Standard Cost Direct materials 4.10 kilograms $ 2.10 per kilogram $ 8.61 Direct labour 0.50 hour $ 11.00 per hour 5.50 Variable overhead 0.50 hour $ 1.10 per hour 0.55.
The budgeted fixed overhead cost is $14,221 per month. The denominator activity level of the allocation base is 800 direct labour-hours.
During the most recent month, the following activity was recorded:
a. 10,000 kilograms of material were purchased at a cost of $2.19 per kilogram.
b. A total of 840 hours of direct labour time was recorded at a total labour cost of $9,220.
c. The variable overhead cost was $1,540, and the fixed overhead cost was $14,306.
Assume that the company produced 1,600 units during the month, using 6,800 kilograms of material in the production process. (The rest of the material purchased remained in inventory.)
Required: 1. Compute the direct materials price and quantity variances for the month.
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