[crazyhorse]

The Dorcas Company uses standard costing and has established the following direct material and direct labor standards for each unit of Steph:

Direct materials 2 gallons at $4 a gallon
Direct labor 0.5 hours at $8 per hour

During September, the company made 6000 Stephs and incurred the following costs:

Direct materials purchased 12,600 gallons at $4.10 per gallon
Direct materials used 12,600 gallons
Direct labor used 2,800 hours at $7.65 per hour

a) What was the material price variance for September?
b) What was the labor time variance for September?

[CaptainForest]

a)
material price variance = Actual Usage x (Standard Cost – Actual Cost)
= 12,600 gallons x (4.00 – 4.10)
= $1,260 U

material price variance = $1,260 U

b)
labor time variance = Actual Rate x (Standard Rate – Actual Rate)
= $7.65 x { (0.5x6,000) – 2,800 }
= $7.65 x (3,000 – 2,800)
= 1,530 hours F

labor time variance = 1,530 hours F