Market Manufacturing Inc He Records for March Showed the Following Actual Results

question 120

Essay

Market Manufacturing Inc.has developed the following standards for one of its products.The materials are not substitutable.T
$$\begin{array} { | l | r | r | r | } \hline \text { Material } 1 & 5 \text { yards } & \$ 6 \text { yard } & \$ 30 \\\hline \text { Material } 2 & 6 \text { pieces } & \$ 5 \text { ipiece } & \$ 30 \\\hline \text { Direct labor } & 3 \text { hours } & \$ 24 \text { hour } & \underline{\$ 72 }\\\hline \text { Total variable cost per unit } & & & \$ 132 \\\hline\end{array}$$ he records for March showed the following actual results:
$$\begin{array} { | l | c | c | } \hline \text { Material 1 } & \text { Purchased } & 10,000 \text { yards for } \$ 58,000 \\\hline & \text { Used } & 9,500 \text { yards } \\\hline \text { Material 2 } & \text { Purchased } & 15,000 \text { pieces for } \$ 78,750 \\\hline & \text { Used } & 12,100 \text { pieces } \\\hline \text { Direct labor } & & 5,900 \text { hours for } \$ 147,500 \\\hline \text { Units produced } & & 2,000 \text { units } \\\hline\end{array}$$
Required:
(1) Calculate the following variances:

(a) Material purchase price variance for material 1.
(b) Material quantity variance for material 1.
(c) Material purchase price variance for material 2.
(d) Material quantity variance for material 2.
(e) Labor rate variance.
(f) Labor efficiency variance.

(2) Give at least one possible cause for each of the following variances:

(a) material 2 quantity variance.
(b) labor rate variance.
(c) labor efficiency variance.

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Definitions:

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