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Materials Variances Mahn Corporation produces high-quality leather belts. The company uses a standard costing system and has set the following standards for materials and labour:
Materials Variances Mahn Corporation produces high-quality leather belts. The company uses a standard costing system and has set the following standards for materials and labour: $12.00 Leather (3 strips @ $4) Direct labour (0.75 hr. @ $12) 9.00 Total prime cost $21.00 During the first month of the year, Mahn produced 92,000 belts. Actual leather purchased was 297,000 strips at $4.20 per strip. There were no beginning or ending inventories of leather. Actual direct labour was 78,200 hours at $13.00 per hour. Required: Break down the total variance for materials into a price variance and a usage variance using the columnar and formula approaches. If required, enter favourable values as negative numbers. Price variance Unfavourable Usage variance Unfavourable Total variance Unfavourable Materials and Labour Variances At the beginning of the year, Shults Company had the following standard cost sheet for one of its plastic products: Direct materials (5 kg @ $4.00) Direct labour (2 hrs. @ $11.25) $20.00 22.50 $42.50 Standard prime cost per unit The actual results for the year are as follows: a. Units produced: 175,000. b. Materials purchased: 930,000 kilograms @ $4.10. c. Materials used: 925,000 kilograms. d. Direct labour: 362,500 hours @ $11.15. Required: 1. Compute price and usage variances for materials. Material price variance Unfavourable Material usage variance Unfavourable 2. Compute the labour rate and labour efficiency variances. Labour rate variance Favourable Labour efficiency variance Unfavourable
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