Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below:

Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below:

	Standard Quantity or Hours		Standard Price        or Rate			Standard Cost
Direct materials	7.0	pounds	$	3.00	per pound	$	21.00
Direct labor	0.4	hours	$	14.00	per hour	$	5.60

During the most recent month, the following activity was recorded:

a.	Thirteen thousand six hundred pounds of material were purchased at a cost of $2.90 per pound.
b.	The company produced only 1,360 units, using 12,240 pounds of material. (The rest of the material purchased remained in raw materials inventory.)
c.	Six hundred and forty four hours of direct labor time were recorded at a total labor cost of $7,728.

Required:

Compute the materials price and quantity variances for the month. Direct materials price variance $1,360 F Direct materials quantity variance $8,160 U Explanation: Notice in the solution below that the materials price variance is computed for the entire amount of materials purchased, whereas the materials quantity variance is computed only for the amount of materials used in production. Actual Quantity of Input, at Actual Price   Actual Quantity of Input, at Standard Price   Standard Quantity Allowed for Output, at Standard Price (AQ × AP)   (AQ × SP)   (SQ × SP)           13,600 pounds × $2.90 per pound   13,600 pounds × $3.00 per pound   9,520 pounds* ×  $3.00 per pound = $39,440   = $40,800   = $28,560   Price Variance, $1,360 F           12,240 pounds ×         $3.00 per pound           = $36,720               Quantity Variance, $8,160 U   *1,360 units × 7.0 pounds per unit = 9,520 pounds Alternatively, the variances can be computed using the formulas: Materials price variance = AQ (AP – SP) 13,600 pounds ($2.90per pound – $3.00 per pound) = $1,360 F Materials quantity variance = SP (AQ – SQ) $3.00 per pound (12,240 pounds – 9,520 pounds) = $8,160 U