1.

Marley Company

The following July information is for Marley Company:

Standards:
Material 3.0 feet per unit @ P4.20 per foot
Labor 2.5 hours per unit @ P7.50 per hour

Actual:
Production 2,750 units produced during the month
Material 8,700 feet used; 9,000 feet purchased @ P4.50 per foot
Labor 7,000 direct labor hours @ P7.90 per hour

1. What is the material price variance (calculated at point of purchase)?

Material Price Variance = (AP - SP) * AQ
= ($4.50 - $4.20) * 9,000 feet purchased
= $2,700 U

2. What is the material quantity variance?

Material Quantity Variance = (AQ - SQ) * SP
= (8,700 - (2,750 * 3)) * $4.20
= $1,890 U
3. What is the labor rate variance?
Labor Rate Variance = (AP - SP) * AQ
= ($7.90 - $7.50) * 7,000 hr used
= $2,800 U
4. What is the labor efficiency variance?
Labor Efficiency Variance = (AQ - SQ) * SP
= (7,000 hr - (2.5 hr/unit * 2,750 units)) * $7.50
= $938 U (rounded)

2. Hermosa Enterprises

Hermosa Enterprises recently experienced a fire, forcing the company to use incomplete
information to analyze operations. Consider the following data and assume that all materials
purchased during the period were used in production:
Direct materials:
Standard price per pound: $9 (1) actual materials used
Actual price per pound: $8
= P20,000 F
Price variance: $20,000F
Total of direct-material variances: $2,000F (2) materials quantity variance
=P18,000 U
Direct labor: (3) labor rate variance
Actual hours worked: 40,000 =P 40,000 U
Actual rate per hour: $15 (4) standard labor rate per hour
Efficiency variance: $28,000F =P 14
Total of direct-labor variances: $12,000U (5) standard labor time per finished
unit.
Hermosa completed 12,000 units. =P3.5
3. Taylor Company

Taylor Company applies overhead based on direct labor hours and has the following available
for November:
1. Controllable
Standard:
Variance
Direct labor hours per unit 5
Variable overhead per DLH $.75 =240 U
Fixed overhead per DLH 2. Volume Variance
(based on 8,900 DLHs) $1.90 =190 F
3. Spending Variance
Actual: =315 U
Units produced 1,800 4. Capacity Variance
Direct labor hours 8,900 =190 F
Variable overhead $6,400 5. Efficiency Variance
Fixed overhead $17,500 =75 F

4.Blake company
Blake company has a standard price of P5.50 per pound of materials. July’s result showed an
unfavorable material price variance of P44 and a favorable quantity variance of P 209. If 1,066
pounds were used in production, what was the standard quantity allowed for materials?

Standard Quantity: 1066x5.50=5863 1104x5.50=6072

1104

44 U 209 F

165 F