Home Work No: 01 Hector Inc., which produces a single product, has prepared the following
standard/ budgeted cost sheet for one unit of the product.
Direct materials (6 pounds at $2.50 per pound) $15.00
Direct labor (3.1 hours at $12.00 per hour) $37.20
During the month of April, the company manufactures 250 units and incurs the following
actual costs.
Direct materials purchased and used (1,600 pounds) $4,192
Direct labor (760 hours) $8,740
Instructions
Compute the total, price, and quantity variances for materials and labor.
Solution:
Workings 
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Here actual output = 250 units and required input for 250 units of production = 1600
pounds.
Standard input/ budgeted = 6 pounds per unit, so total standard/ budgeted input = 6 *
250 = 1500
Actual cost price for direct materials = $4192/ 1600 = $2.62
Actual cost price for direct labor = $8740/ 760 h = $11.5 per hour
Actual hour = 760 h for 250 units of output
Budgeted hour for 250 units of output = actual production * budgeted hour per unit of
output ==250 * 3.1= 775
Budgeted / Standard (250×6) = 1500 pounds
Material Price $2.50 per pound
Budgeted Hour ---- (250×3.1h) = 775h
Labor price per hour $12
Actual Quantity 1600 pounds
Material Price ($4,192/1600) = $2.62 per
pound
Actual Total Hour 760 h
Labor cost per hour ($8,740/760h) = $11.5
Direct Material:
Price Variance = (actual input price – budgeted input price) × actual quantity of input
= ($2.62 – $2.50) × 1600
= $192 UF
Quantity Variance = (actual quantity of input – budgeted quantity of input) × budgeted price
= (1600 pound – 1500 pound) × $2.50
= 250 UF
Total Direct Material Variance = Price + Quantity
= $192 UF + $250 UF
= $442 UF
Direct Labor:
Price Variance = (actual cost price – budgeted cost price) × actual quantity of input
= ($11.5 – $12) × 760h
= $380 F
Quantity Variance = (actual quantity of input – budgeted quantity of input) × budgeted price
= (760h – 775h) × $12
= $180 F
Total Direct Labor Variance = Price + Quantity
= $380 F +$180 F
= $560 F
Home Work 02 Manlow Company makes a cologne called Allure. The budgeted cost for one
bottle of Allure is as follows.
Manufacturing Cost Elements Quantity
Direct materials
Direct labor
Quantity
6 oz *
0.5 h
Price
$0.90
$12
Total
$5.40
$6
During the month, the following transactions occurred in manufacturing 10,000 bottles of
Allure.
1. 58,000 ounces of materials were purchased at $1.00 per ounce.
2. All the materials purchased were used to produce the 10,000 bottles of Allure.
3. 4,900 direct labor hours were worked at a total labor cost of $56,350.
Instructions
(a) Compute the total variance and the variances for direct materials and direct labor
elements.
Solution
Budgeted / Standard (10,000×6 oz) = 60,000 ounces
Material Price $0.90 per ounce
Budgeted Hour ---- (10,000×0.5h) = 5000h
Labor price per hour $12
Actual Quantity 58,000 ounces
Material Price $1.00 per ounce
Actual Total Hour 4900 h
Labor cost per hour
($56,350/4900h) = $11.5
Direct Material:
Price Variance = (actual input price – budgeted input price) × actual quantity of input
= ($1.00 – $0.90) × 58,000
= $5800 UF
Efficiency Variance = (actual quantity of input – budgeted quantity of input) × budgeted price
= (58000 ounces – 60000 ounces) × $0.90
= 1800 F
Total Direct Material Variance = Price + Efficiency
= $5800 UF + $1800 F
= $4000 UF
Direct Labor:
Price Variance = (actual cost price – budgeted cost price) × actual quantity of input
= ($11.5 – $12) × 4900h
= $2450 F
Efficiency Variance = (actual quantity of input – budgeted quantity of input) × budgeted price
= (4900h – 5000h) × $12
= $1200 F
Total Direct Labor Variance = Price + Efficiency
= $2,450 F +$1,200 F
= $3,650 F
Homework No: 03 Rogen Corporation manufactures a single product. The standard cost per
unit of product is shown below.
Direct materials—1 pound plastic at $7.00 per pound $ 7.00
Direct labor—1.6 hours at $12.00 per hour 19.20
Actual costs for October in producing 4,800 units were as follows.
Direct materials (5,100 pounds) $ 36,720
Direct labor (7,400 hours) 92,500
The purchasing department buys the quantities of raw materials that are expected to be used
in production each month. Raw materials inventories, therefore, can be ignored.
Instructions
(a) Compute all of the materials and labor variances.
Budgeted/Standard (4,800 units×1 pound) = 4,800 pound
Material Price $7.00 per pound
Budgeted Total Hour (4800 units×1.6 h)
= 7,680 h
Labor Price Per Hour $12.00
Actual Quantity 5,100 pounds
Material Price ($36,720/5,100) =
$7.20 per pound
Actual Total Hour 7,400 h
Labor Price per Hour $12.50
Solution
Direct Material:
Price Variance = (actual input price – budgeted input price) × actual quantity of input
= ($7.20 – $7.00) × 5,100 pounds
= $1,020 UF
Efficiency Variance = (actual quantity of input – budgeted quantity of input) × budgeted price
= (5,100 pounds – 4,800 pounds) × $7.00
= $2,100 UF
Total Direct Material Variance = Price + Efficiency
= $1,020 UF + $2,100 UF
= $3,120 UF
Direct Labor:
Price Variance = (actual cost price – budgeted cost price) × actual quantity of input
= ($12.5 – $12) × 7,400h
= $3,700 UF
Efficiency Variance = (actual quantity of input – budgeted quantity of input) × budgeted price
= (7,400h – 7680h) × $12
= $ 3360F
Total Direct Labor Variance = Price + Efficiency
= $3,700 UF +$3,360 F
= $340 UF