[albita_999]

Im really counfused.. I have been trying to solve this problem for two hours. I try to use the formulas for material price variance and material quantity variance. And also for labor the labor price and labor quantity formulas, but I can't find the standard quantity and the standard hours. Can somebody please help me?

A manufacturing company manufactures down sleeping bags. Each sleeping bag requires 4 pounds of down and takes .3 hours of direct labor. The standard cost of the down used by this manufacturer is $8 per pound and the standard labor cost is %10 per hour. In November, this manufacturer purchased 15,000 pounds of down for $140,750. During the year, the company manufactured 4,000 sleepong bags. Payroll reported a total of 1480 direct labor hours at a cost of $14,060.

a) Compute the materials price and quantity variances and indiacte whether the variances are favorable or unfavorable.

b) Compute the labor price and quantity variances and indicate whether the variances are favorable or unfavorable.

[morgaine300]

Standard quantity is what I find to be the most annoying part of variances. It took me quite a while to get this through my head. (Then after learning it, I had to get it through my head again when I had to start teaching it.)

Standard quantity (or standard hours, which works the same cause it is a quantity) is the quantity it should take at the given units. For instance, your materials is 4 pounds of down per unit (standard), and you actually made 4000 sleeping bags. So standard quantity is what it should have taken at the standard of 4 lbs to make the 4000 sleeping bags. How much would that be?

I think it confuses people cause you have to use actual units to get this number, even though you're trying to get a standard.

Does that help?

[albita_999]

Yes it helps me a lot. Thank you very much! :)
I think I get it.. so I just take the 4000 units and multiply it by the 4 pounds and that would be my standard quantity and hours? Is that how it works?

[morgaine300]

That particular calculation is your standard quantity. But think, how can that also be your standard hours when 4 pounds was given for materials, not labor. You've been given another amount for labor. But the concept for standard hours is the same.