During the most recent month, the following activity was recorded: a. Eleven thousand two hundred pounds of material were purchased at a cost of $2.90 per pound. b. The company produced only 1,120 units, using 10,080 pounds of material. (The rest of the material purchased remained in raw materials inventory.) c. Five hundred and forty eight hours of direct labor time were recorded at a total labor cost of $6,576.

Complete question:

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:

Standard Quantity or HoursStandard Price or RateStandard  Cost

Direct materials4.6pounds$2.50per pound$11.50

Direct labor0.2hours$12.00per hour$2.40

During the most recent month, the following activity was recorded:

a. Eleven thousand two hundred pounds of material were purchased at a cost of $2.90 per pound.

b. The company produced only 1,120 units, using 10,080 pounds of material. (The rest of the material purchased remained in raw materials inventory.)

c. Five hundred and forty eight hours of direct labor time were recorded at a total labor cost of $6,576.

Solution:

Direct Material price Variance

= (Actual Price - Standard price) x Actual Quantity

= ($2.90 - $2.50) x 10,080 = $4032 (F)

Standard Quantity = 1,120 x 4.6 = 5,152 pounds

Direct Material Quantity Variance

= (Actual Quantity - Standard Quantity) x Standard Price

= (10,080 - 5,152  ) x $2.50 = $12,320 (U)

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