Price Variances:
| Price Variances: | Units Produced = 80,000 | ||||||||
| Units Sold = 60,000 | |||||||||
| (Actual Price – Standard Price) X Actual Quantity | |||||||||
| Direct Materials Purchased and Used | |||||||||
| Actual | Standard | Actual Quantity | Variance | Favorable or Unfavorable | Actual square yards of cloth purchased and used: 128,000 | ||||
| Cloth | $1.25 | $1.15 | 128,000 | $12,800 | Favorable | Actual price incurred per yard: $1.25 | |||
| Handle Assembly | $0.99 | $1.05 | 80,808 | -$4,848 | Unfavorable | Actual handles purchased and used: 80,808 | |||
| Actual price per handle/rib/stretcher assembly: $0.99 | |||||||||
| Labor Price Variance | $7.62 | $7.50 | 15,748 | $1,890 | Favorable | ||||
| Direct Manufacturing Labor Used | |||||||||
| Requirement 2 | Actual direct labor hours used: 15,748 | ||||||||
| Efficiency Variances: | Actual price per hour: $7.62 | ||||||||
| Direct labor costs: $120,000 | |||||||||
| (Actual Quantity of Input Used – Standard Quantity of Input Allowed for Actual Output) X Budgeted Price of Input | |||||||||
| Standard Rates | |||||||||
| Actual | Standard | Standard Price | Variance | Favorable or Unfavorable | Standard labor hours per unit: 0.20 | ||||
| Cloth | 128,000 | 120,000 | $1.15 | $9,200.00 | Favorable | Standard labor price per hour: $7.50 | |||
| (1.5 Yards per Unit) | Square yards material per unit: 1.50 | ||||||||
| Handle Assembly | 80,808 | 80,000 | $1.05 | $848 | Favorable | Standard price per yard: $1.15 | |||
| (1 per Unit) | Handle/rib/stretcher assembly per unit: 1 | ||||||||
| Labor | 15,748 | 16,000 | $7.50 | -$1,890 | Unfavorable | Standard price per handle assembly: $1.05 | |||
| (.20 per Unit) | |||||||||
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