Question: What needs to be investigated to determine the reason for the variance/Why? ? I understand these are some factors: 1. The Actual price per unit of material purchased is $7.75 which is equal to Standard price per unit of Raw Material. So there will not be any Material Price Variance. 2. Total Standard Requirement of raw material =27380 But actual quantity purchased = 31000 So there is Adverse Material Usage Variance. Amount of Material Usage Variance = 31000*7.75 - 27380*7.75 = $28,055 Unfavorable ? ~ But what about the labor budget? ?

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Thank you in advance, for your time. ?

Material Std. Price Actual Price Std. Qty. Actual Qty Labor Std. Rate Actual Rate Std. Hrs. Actual Hrs. 7.75 1.7527,380 31,000 16 15 30,000 33,000 Material Cost Variance Material Cost Variance Material Cost Variance Std. Qty. 'Std. Price-(Actual Qty. Actual Price) 27 380 7.75)-(31,00 7.35 212,195-240,250) LaborCostWariance: (Std. Hrs.*Std. Rate)-(Actual Hrs. * Actual Rate) Labor Cost Variance 30000 16.00)3000 15.00) Labor Cost Variance 480,000-495,000) Material Cost Variance 28,055 (U Labor Cost Variance 15,000 (U D Labor Rate Variance Actual Hrs. (Std. Rate Actual Rate) Material Price Variance Material Price Variance = Material Price Variance Actual Oty. Std. Price-Actual Price) 31,000* (7.75-1.75) 31,000 (0) Labor Rate Varian 33,000 (16.00-15.00) Labor Rate Variance 33000 (1.00 Material Price Variance Labor Rate Variance 33,000F) E Labor Effciency Variance Std. Rate (Std. Hrs. Actual Hrs.) Materials Usage Variance Materials Usage Variance Materials Usage Variance- Std. Price (Std. Qty, Actual Qty) 1.75* 27380-31,000 Labor Efficiency Varane- 16,00 30,000-33,000) Labor EfficiencyVariance= 16.00. (3,000) 5*(-3620 Materials Usuage Variance 28,055.00) ) Labor Efficiency Variance 48,00o() Peyton Approved Budget Variance Report For the Year Ended... Labor Variance Actual Standard Quantity 30,000 Variance Actual Cost 15.00 uan Standard Cost 16.00 15,000 Unfavorable 33,000 495,000 Actual Results Static Budget Variance Unfavorable Favorablel Total Cost 495,000 Total Standard Cost 480,000 Direct materials variances Costprice variance Eficiency variance Mateals Variance $240,000.00 $240,000.00 240.250 212,19528,055 Favorable Total direct materials variance 240,250 212,195 28,055 Favorable Actual Quantity 1,000 Variance Actual Cost S 1.75 Standard Quantity 27,380 Standard Cost 7.75 28,055 Unfavorable Direct labor variances Cost price variance Efficiency variance $495,000.00 $528,000.00 33,000) Favorable 528000 40000 48,00 Unfavorable Total Cost 240 250 Total Standard Cost 12 195 Total direct labor variancA