Managerial Accounting: E11-8 Huron Company produces a commercial cleaning compound

Important Reminder!!! There might be other versions of this problem - amounts and dates have been changed - so please make sure you review and compare this tutorial to the problem in your homework. Even with different amounts, format and way of solving the problem is still the same so pleases be guided accordingly.

Managerial Accounting
Exercise 11-8 Direct Materials and Direct Labor Variances
Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below:
Std Qty or hours Std Price or rate Std Cost
Direct materials 4.6 pounds $2.50 per pound $11.50
Direct labor 0.2 hours $12.00 per hour $2.40

During the most recent month, the following activity was recorded:
a. Twenty thousand pounds of material were purchased at a cost of $2.35 per pound.
b. All of the material purchased was used to produce 4,000 units of Zoom.
c. 750 hours of direct labor time were recorded at a total labor cost of $10,425.

1. Compute the direct materials price and quantity variances for the month.
2. Compute the direct labor rate and efficiency variances for the month.
Powered by