Standard Costing Question & Answer For Materials & Labor Variances

(a) Materials:

Standard price-$4.15 per unit; actual price-$4.28 per unit: material requisitioned 1,000 units; production achieved 1,020

(b) Labor

Standard rate-$1.80 per hour; rate paid $1.95 per hour; standard time allowed per article 8 minutes; hours worked 170

(a) Material Variances:

(i) Material COST variance: = (Actual quantity x Actual price) less (Standard quantity x Standard price)

=(1,000x$4.28)-(1,020x$4.15)=$4,280-$4,233=$47(A)

(ii) Material PRICE variance=(Actual price less Standard price)x Actual quantity

=($4.28-$4.15)x1,000=$130(A)

(iii) Material USAGE variance:=(Actual quantity less Standard quantity)x Standard price

=(1,000-1,020)x$4.15=20x$4.15=$83(F)

(b) Labor Variances:

(i)Direct WAGES variance=(Actual hours x Actual rate) less (Standard hours x Standard rate)

=(170x$1.95)-(136x$1.80)=$331.50-$244.80=$86.70(A)

(ii) Wages RATE variance=(Actual rate less Standard rate)x Actual hours

=($1.95-$1.80) x 170=$0.15×170=$25.50(A)

(iii) Labor EFFICIENCY variance=(Actual hours less Standard hours) x Standard rate

=(170-136) x $1.80=$61.20(A)