Horton Company adopted a standard cost system several years ago. The standard costs for the prime costs of its single product are as follows:
$\begin{array}{lrr}
\text { Material:8 kilograms@\$5 per kilogram } &\$40.00\
\text { Labor:6hours@\$8.20per hour} &\$49.20\
\end{array}$

The following operating data were taken from the records for November:
$\begin{array}{ll}
\text { Units completed } & \text { 5,600units } \
\text { Budgeted output } & 6,00 \text { units } \
\text { Purchase of materials } & 50,000 \text { kilograms } \
\text { Total actual labor costs } & \$ 300,760 \
\text { Actual labor hours } & 36,500 \text { hours } \
\text { Material efficiency (quantity) variance } & \$ 1,50 \text { unfavorable } \
\text { Total material variance } & \$750 \text { unfavorable } \
\end{array}$
Required:
(Be sure to indicate whether the variances are favorable or unfavorable and show your work.)
a. What is the direct labor rate variance for November?
b. What is the direct labor efficiency variance for November?
c. What is the actual kilograms of material used in the production process during November?
d. Assume the purchasing department is responsible for the material price variance, what is the actual price paid per kilogram of material during November (assume no increase/decrease in inventory during the month)?

Question

Horton Company adopted a standard cost system several years ago. The standard costs for the prime costs of its single product are as follows:
 $\begin{array}{lrr}
  \text { Material:8 kilograms@\$5 per kilogram } &\$40.00\
 \text {  Labor:6hours@\$8.20per hour} &\$49.20\
\end{array}$
 
The following operating data were taken from the records for November:
 $\begin{array}{ll}
 \text { Units completed }  & \text { 5,600units } \
 \text { Budgeted output } &  6,00 \text { units } \
\text { Purchase of materials } &  50,000 \text { kilograms } \
 \text { Total actual labor costs } & \$ 300,760 \
\text { Actual labor hours } & 36,500 \text { hours } \
 \text { Material efficiency (quantity) variance } & \$  1,50 \text { unfavorable } \
\text { Total material variance } & \$750 \text { unfavorable }  \
\end{array}$ 
Required:
(Be sure to indicate whether the variances are favorable or unfavorable and show your work.)
a. What is the direct labor rate variance for November?
b. What is the direct labor efficiency variance for November?
c. What is the actual kilograms of material used in the production process during November?
d. Assume the purchasing department is responsible for the material price variance, what is the actual price paid per kilogram of material during November (assume no increase/decrease in inventory during the month)?

Quizplus · Accepted Answer

The Answer of Horton Company adopted a standard cost system several years ago. The standard costs for the prime costs of its single product are as follows:
 $\begin{array}{lrr}
  \text { Material:8 kilograms@\$5 per kilogram } &\$40.00\
 \text {  Labor:6hours@\$8.20per hour} &\$49.20\
\end{array}$
 
The following operating data were taken from the records for November:
 $\begin{array}{ll}
 \text { Units completed }  & \text { 5,600units } \
 \text { Budgeted output } &  6,00 \text { units } \
\text { Purchase of materials } &  50,000 \text { kilograms } \
 \text { Total actual labor costs } & \$ 300,760 \
\text { Actual labor hours } & 36,500 \text { hours } \
 \text { Material efficiency (quantity) variance } & \$  1,50 \text { unfavorable } \
\text { Total material variance } & \$750 \text { unfavorable }  \
\end{array}$ 
Required:
(Be sure to indicate whether the variances are favorable or unfavorable and show your work.)
a. What is the direct labor rate variance for November?
b. What is the direct labor efficiency variance for November?
c. What is the actual kilograms of material used in the production process during November?
d. Assume the purchasing department is responsible for the material price variance, what is the actual price paid per kilogram of material during November (assume no increase/decrease in inventory during the month)?