"Standard Cost Data per 1 Unit Quantity Price Direct Material 3 lbs $2.00/lb Direct Labor 2 hrs $4.00/hr Actual Data: Units produced 20 Material purchase 100 lbs at $2.25 per lb Material usage 90 lbs Direct Labor 30 hrs; total cost $123 Compute all standard costs and variances for DM & DL. Show all computations."

Answer and Explanation:

The computation is shown below:

The Standard cost for 20 units is  

Material (20 units × 3lbs × $2lb)$120

Direct labor (20 units  × 2lbs × $4)$160

Total standard cost$280

Now  

Direct material price variance = (Actual price -Standard price) × Actual quantity

= (2.25-2.00) × 90

=22.5 Unfavorable

Direct material quantity variance = (Actual quantity- Standard quantity) × Standard price  

=(90-20x3) × 2

= $60 unfavorable  

Direct material cost variance =Direct material price variance + Direct material quantity variance

=22.5 UF+$60UF

=82.50UF

Direct labor Rate variance = (Actual rate -Standard rate)  × actual hours  

= (4.10-4.00) × 30 hrs

= $3 Unfavorable  

Actual rate = $123 ÷ 30 hrs

= $4.10

Direct labor Quantity variance = (Actual hours -Standard hours ) × Standard rate

=(30-20 × 2) × 4

=$40 favorable  

Direct labor cost variance =Direct labor Rate variance+Direct labor Quantity variance

=$3 unfavorable  + $40 favorable  

=$37 favorable