Concept explainers
Materials and labor variances
Fausto Fabricators Inc. uses a
The following operating data came from the records for the month:
In process, beginning inventory, none.
In process, ending inventory, 800 units, 80% complete as to labor; material is issued at the beginning of processing.
Completed during the month, 5,600 units.
Materials issued to production were 51,680 lb @ $.55 per pound. Direct labor was $384,000 for 40,000 hours worked.
Required:
Calculate the following variances, using the diagram format in Figure 8-4.
- 1. Materials price.
- 2. Materials quantity.
- 3. Net materials variance.
- 4. Labor rate.
- 5. Labor efficiency.
- 6. Net labor variance.
(Hint: Before determining the standard quantity for materials and labor, you must first compute the equivalent units of production for materials and labor.)
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