2019-01-28T09:58:35+00:00

# E8-5 The following direct materials and direct labor data pertain to the operations of Juan Manufacturing Company for the month of August.

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# Total, price, and quantity variances for materials and labor

E8-5 The following direct materials and direct labor data pertain to the operations of
Juan Manufacturing Company for the month of August.

Costs Quantities
Actual labor rate \$13.00 per hour Actual hours Incurred 4,200 hours
and used
Actual materials \$128 per ton Actual quantity of materials 1,230 tons
price purchases and used

Standard labor rate \$12.00 per hour Standard hours used 4,300 hours

Standard materials \$130.00 per ton Standard Quantity of 1,200 tons
price materials used

Instructions
Compute the total, price, and quantity variances for materials and labor.
Provide two possible explanations for each of the unfavorable variances
calculated above, and suggest where responsibility for the unfavorable result
might be placed.
Compute the materials and labor variances and list reasons for unfavorable variances.
Objective 4 Study Objective 6)

Excel Template

(a) Total materials variance:
\$157,440 -\$156,000 = \$x,440 U
(1,xxx X \$xxx) (1,xxx X \$xxx)

Materials price variance:
\$157,440 - \$159,900
(1,xxx X \$xxx) (1,xxx X \$xxx) = \$x,460 F

Materials quantity variance:
\$159,900 - \$156,000
(1,xxx X \$xxx) (1,200 ( X \$130) = \$x,900 U

Total labor variance:
\$54,xxx - \$xx,600
(x,200 X \$xx) (x,300 X \$xx) = \$x,000 U

Labor price variance:
\$xx,600 - \$xx,400
(x,x00 X \$xx) (x,x00 X \$xx) = \$x,200 U

Labor quantity variance:
\$xx,400 - \$xx,600
(x,200 X \$xx) (x,300 X \$xx)= \$x,x00 F

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