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    Variance 1

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    Lhorene Hope Dueñas
    Low Company produced 3,500 units in September. There were variances for material and labor costs. The material price variance was $735 favorable due to purchasing material at a lower price than standard. The material quantity variance was $750 unfavorable because more material was used than standard for the number of units produced. The labor rate variance was $1,040 unfavorable since actual labor rate paid was higher than standard rate. The labor efficiency variance was $825 favorable because fewer labor hours were used than standard for the number of units produced.

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    Variance 1

    Uploaded by

    Lhorene Hope Dueñas
    15 views2 pages
    Low Company produced 3,500 units in September. There were variances for material and labor costs. The material price variance was $735 favorable due to purchasing material at a lower price than standard. The material quantity variance was $750 unfavorable because more material was used than standard for the number of units produced. The labor rate variance was $1,040 unfavorable since actual labor rate paid was higher than standard rate. The labor efficiency variance was $825 favorable because fewer labor hours were used than standard for the number of units produced.

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    Low Company produced 3,500 units in September. There were variances for material and labor costs. The material price variance was $735 favorable due to purchasing material at a lower price than standard. The material quantity variance was $750 unfavorable because more material was used than standard for the number of units produced. The labor rate variance was $1,040 unfavorable since actual labor rate paid was higher than standard rate. The labor efficiency variance was $825 favorable because fewer labor hours were used than standard for the number of units produced.

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    15 views2 pages

    Variance 1

    Uploaded by

    Lhorene Hope Dueñas
    Low Company produced 3,500 units in September. There were variances for material and labor costs. The material price variance was $735 favorable due to purchasing material at a lower price than standard. The material quantity variance was $750 unfavorable because more material was used than standard for the number of units produced. The labor rate variance was $1,040 unfavorable since actual labor rate paid was higher than standard rate. The labor efficiency variance was $825 favorable because fewer labor hours were used than standard for the number of units produced.

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    of 2

    Low Company

    The following information is for Low Company’s September production:

    Standards:
    Material 4.0 feet per unit @ $3.75 per foot
    Labor 3.0 hours per unit @ $8.25 per hour

    Actual:
    Production 3,500 units produced during the month
    Material 14,200 feet used; 14,700 feet purchased @ $3.70 per foot
    Labor 10,400 direct labor hours @ $8.35 per hour

    (Round all answers to the nearest dollar.

    1. Refer to low Company. What is the material price variance (calculated at point of purchase)?
    a. $ 735 F
    b. $ 735 U
    c. $ 710 F
    d. $ 710 U
    ANS: A
    Material Price Variance = (AP - SP) * AQ
    = ($3.70 - $3.75) * 14,700 feet purchased
    = $735 F

    PTS: 1 DIF: Easy OBJ: 7-3 NAT: AACSB: Analytical Skills


    LOC: AICPA Functional Competencies: Measurement, Reporting

    2. Refer to low Company. What is the material quantity variance?


    a. $ 740 F
    b. $ 750 F
    c. $ 750 U
    d. $2,625 U
    ANS: C
    Material Quantity Variance = (AQ - SQ) * SP
    = (14,200 - (3,500 * 4)) * $3.75
    = $750 U

    PTS: 1 DIF: Moderate OBJ: 7-3 NAT: AACSB: Analytical Skills


    LOC: AICPA Functional Competencies: Measurement, Reporting
    3. Refer to Low Company. What is the labor rate variance?
    a. $1,040 U
    b. $1,040 F
    c. $1,420 U
    d. $1,420 F
    ANS: A
    Labor Rate Variance = (AP - SP) * AQ
    = ($8.35 - $8.25) *10,400 hr used
    = $1,040 U

    PTS: 1 DIF: Easy OBJ: 7-3 NAT: AACSB: Analytical Skills


    LOC: AICPA Functional Competencies: Measurement, Reporting

    4. Refer to low Company. What is the labor efficiency variance?


    a. $825 F
    b. $825 U
    c. $835 F
    d. $835 U
    ANS: A
    Labor Efficiency Variance = (AQ - SQ) * SP
    = (10,400 hr - (3 hr/unit * 3,500 units)) * $8.25
    = $825 F

    PTS: 1 DIF: Moderate OBJ: 7-3 NAT: AACSB: Analytical Skills


    LOC: AICPA Functional Competencies: Measurement, Reporting

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