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    Petrillo Company produces engine parts using standard costing. They produced 300 units in March using 1,700 lbs of direct materials that cost $10,540 total. The price variance was $340 unfavorable and the quantity variance was $600 favorable based on the standard of 7 lbs per unit costing $6 per lb. Coolwater Corporation produces water tanks with a standard labor cost of $15 per tank. They produced 500 tanks spending $7,560 at $28 per hour, resulting in an unfavorable rate variance of $540 and a favorable efficiency variance of $600, for a total variance of $60 unfavorable.

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    Petrillo Company produces engine parts using standard costing. They produced 300 units in March using 1,700 lbs of direct materials that cost $10,540 total. The price variance was $340 unfavorable and the quantity variance was $600 favorable based on the standard of 7 lbs per unit costing $6 per lb. Coolwater Corporation produces water tanks with a standard labor cost of $15 per tank. They produced 500 tanks spending $7,560 at $28 per hour, resulting in an unfavorable rate variance of $540 and a favorable efficiency variance of $600, for a total variance of $60 unfavorable.

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    57 views1 page

    K

    Uploaded by

    Sophie Pearson
    Petrillo Company produces engine parts using standard costing. They produced 300 units in March using 1,700 lbs of direct materials that cost $10,540 total. The price variance was $340 unfavorable and the quantity variance was $600 favorable based on the standard of 7 lbs per unit costing $6 per lb. Coolwater Corporation produces water tanks with a standard labor cost of $15 per tank. They produced 500 tanks spending $7,560 at $28 per hour, resulting in an unfavorable rate variance of $540 and a favorable efficiency variance of $600, for a total variance of $60 unfavorable.

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    © All Rights Reserved
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    [Exercise 1] Petrillo Company produces engine parts for large motors and

    uses standard costing for its production costing and control. The
    company provided the following information for the month of March:
    Standards for direct materials per unit 7 lbs. at $6 per lbs.
    Parts produced 300 units
    Direct materials purchased 1,700 lbs. at $10,540 in total
    Beginning inventory of direct materials 500 lbs.
    Ending inventory of direct materials 200 lbs.
    Compute the price variance and quantity (usage) variance.

    Direct materials price variance = 340 U


    Direct materials quantity (usage) variance = 600 F

    [Exercise 2] Coolwater Corporation produces plastic water tanks. Each


    water tank has a standard labor requirement of 30 minutes. The standard
    direct labor costs assigned to each tank is $15. During the last week, 500
    water tanks were produced with total labor costs of $7,560 at a labor rate
    of $28. What are the direct labor rate and efficiency variances?

    Direct labor rate variance = 540 F


    Direct labor efficiency variance = 600 U
    Total variance = 60 U

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