Wilson's Winter Woolens manufactures jackets and other wool clothing. A certain designed ski parka require the following:


Direct materials standard 2 square yards at $13.50 per yard
Direct manufacturing labor standard 1.5 hours at $20.00 per hour

During the third quarter, the company made 1500 parkas and used 3150 square yards of fabric costing $39375. Direct Labor totaled, 2100 hours $45,150.

a. Compute the direct materials price and efficiency variances for the quarter.
b. Compute the direct manufacturing labor price and efficiency variances for the quarter.

Is this correct?

a. 42525-39375=3150 , 13.50-12.50= 1.50
b. 45159-42000= 3159 , 21.50-20.00= 1.50

The price variances are correct, except that you haven't stated whether they are favorable or unfavorable.

I'm not sure what you're trying to answer with the price differences. (The $1.50) While those numbers are correct mathematically, they don't answer the question, and you haven't shown them being used in a calculation... and in fact, they are not needed to do the problem. So not quite sure whether you're just showing it or think it's an answer to something?

And the efficiency (quantity) variances haven't been done. That's the difference between (standard price x actual quantity) and (standard price x standard quantity).

I am not sure I understand. Where do I get the actual quantity numbers? I know that the standard price is $12.50 but I am unsure of how to figure out the actual quantity. I am assuming that the standard quantity is 1500.

Quote:

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Originally Posted by neversatysfyd

During the third quarter, the company made 1500 parkas and used 3150 square yards of fabric costing $39375. Direct Labor totaled, 2100 hours $45,150.

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3150 square yards of material
2100 hours of direct labor

There's your actual quantities. They always give you that information... or they may give you quantity per unit produced, but they still have to give it to you.

You will be satisfied if you use the following formulae:

Materials Price Variance = Actual Quantity Used x * Standard Price per unit - Actual Price pr unit)

Materials Usage Variance = (Standard Quantity Allowed - Actual Quantity Used) x Standard Price per unit

Labour price variance + Actual Hours worked x (Standard Rate per hour - Actual rate per hour)

Labour Efficiency Variance = (Standard hours allowed - Actual hours worked) x Standard rate per hour