Sonne Company produces a perfume called Whim. The direct materials and direct labor standards for one bottle of Whim are given below: During the most recent month, the following activity was recorded. a. 14, 850 ounces of material were purchased at a cost of $2.00 per ounce. b. All of the material was used to produce 1, 500 bottles of whim. c. 600 hours of direct labor time were recorded at a total labor cost of $4, 200. 1. Compute the direct materials price and quantity variances for the month. (Input all amounts as positive values. Do not round your per unit rates. Leave no cells blank – be certain to enter “0” wherever required. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Round your intermediate calculations and final answers to the nearest dollar amount. Omit the “$” sign in your response.) 2. Compute the direct labor rate and efficiency variances for the month. (Input all amounts as positive values. Do not round your per unit rates, round other intermediate calculations and your final answer to nearest whole dollar. Leave no cells blank- be certain to enter “0” wherever required indicate the effect of each variance by selecting “F” for favorable, ” U” for unfavorable, and “None” for no effect (i.e., zero variance). Round your intermediate calculations and final answers to the nearest dollar amount Omit the “$” sign in your response.)

## Expert Answer

Answer 1.

Direct Materials Price Variance:

Actual Quantity = 14,850 ounces

Actual Rate = $2.00 per ounce

Standard Rate = $2.10 per ounce

Direct Materials Price Variance = (Actual Rate – Standard Rate)*Actual Quantity

Direct Materials Price Variance = ($2.00 – $2.10)*14,850

Direct Materials Price Variance = $1,485 Favorable

Direct Material Quantity Variance:

Actual Quantity = 14,850 ounce

Standard Rate = $2.10 per ounce

Standard Quantity = 7.90 ounces per unit * 1,500 unit

Standard Quantity = 11,850 ounces

Direct Material Quantity Variance = (Actual Quantity – Standard Quantity)*Standard Rate

Direct Material Quantity Variance = (14,850 – 11,850) * $2.10

Direct Material Quantity Variance = $6,300 Unfavorable

Answer 2.

Direct Labor Rate Variance:

Actual Hours = 600

Actual Cost = $4,200

Standard Rate = $5.00 per hour

Direct Labor Price Variance = Actual Cost – Standard Rate*Actual Quantity

Direct Labor Price Variance = $4,200 – $5.00*600

Direct Labor Price Variance = $1,200 Unfavorable

Direct Labor Efficiency Variance:

Actual hours = 600

Standard Rate = $5.00 per hour

Standard hours = 0.50 hours per unit * 1,500 unit

Standard hours = 750

Direct Labor Efficiency Variance = (Actual Hours – Standard hours)*Standard Rate

Direct Labor Efficiency Variance = (600 – 750) *$5.00

Direct Labor Efficiency Variance = $750 Favorable