Questions: E9-15 (Static) Determining Actual Costs, Standard Costs, and Variances [LO 9-3, 9-4] Amber Company produces iron table and chair sets. During October, Amber's costs were as follows: Actual purchase price Actual direct labor rate Standard purchase price Standard quantity for sets produced Standard direct labor hours allowed Actual quantity purchased in October Actual direct labor hours Actual quantity used in October Direct labor rate variance 2.30 per pound 7.50 per hour 2.10 per pound 970,000 pounds 11,000 1,115,000 pounds 10,000 1,000,000 5,500 F Required: 1. Calculate the total cost of purchases for October. 2. Compute the direct materials price variance based on the actual quantity purchased. 3. Calculate the direct materials quantity variance based on the actual quantity used. 4. Compute the standard direct labor rate for October. 5. Compute the direct labor efficiency variance for October. Calculate the total cost of purchases for October.

E9-15 (Static) Determining Actual Costs, Standard Costs, and Variances [LO 9-3, 9-4] Amber Company produces iron table and chair sets. During October, Amber's costs were as follows: Actual purchase price Actual direct labor rate Standard purchase price Standard quantity for sets produced Standard direct labor hours allowed Actual quantity purchased in October Actual direct labor hours Actual quantity used in October Direct labor rate variance 2.30 per pound 7.50 per hour 2.10 per pound 970,000 pounds 11,000 1,115,000 pounds 10,000 1,000,000 5,500 F Required: 1. Calculate the total cost of purchases for October. 2. Compute the direct materials price variance based on the actual quantity purchased. 3. Calculate the direct materials quantity variance based on the actual quantity used. 4. Compute the standard direct labor rate for October. 5. Compute the direct labor efficiency variance for October. Calculate the total cost of purchases for October.
Transcript text: E9-15 (Static) Determining Actual Costs, Standard Costs, and Variances [LO 9-3, 9-4] Amber Company produces iron table and chair sets. During October, Amber's costs were as follows: Actual purchase price Actual direct labor rate Standard purchase price Standard quantity for sets produced Standard direct labor hours allowed Actual quantity purchased in October Actual direct labor hours Actual quantity used in October Direct labor rate variance $\$ 2.30$ per pound $\$ 7.50$ per hour $\$ 2.10$ per pound 970,000 pounds 11,000 $1,115,000$ pounds 10,000 $1,000,000$ $\$ 5,500 \mathrm{~F}$ Required: 1. Calculate the total cost of purchases for October. 2. Compute the direct materials price variance based on the actual quantity purchased. 3. Calculate the direct materials quantity variance based on the actual quantity used. 4. Compute the standard direct labor rate for October. 5. Compute the direct labor efficiency variance for October. Complete this question by entering your answers in the tabs below. Req 1 Req 2 and 3 Req 4 Req 5 Calculate the total cost of purchases for October. Total Purchases Req 1 Req 2 and 3
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Solution

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Solution Steps

Solution Approach
  1. To calculate the total cost of purchases for October, multiply the actual purchase price per pound by the actual quantity purchased.
  2. To compute the direct materials price variance, subtract the standard purchase price from the actual purchase price, then multiply by the actual quantity purchased.
  3. To calculate the direct materials quantity variance, subtract the standard quantity for sets produced from the actual quantity used, then multiply by the standard purchase price.
Step 1: Total Cost of Purchases

To calculate the total cost of purchases for October, we use the formula: \[ \text{Total Cost of Purchases} = \text{Actual Purchase Price} \times \text{Actual Quantity Purchased} \] Substituting the values: \[ \text{Total Cost of Purchases} = 2.30 \, \text{(per pound)} \times 1115000 \, \text{(pounds)} = 2564500.0 \]

Step 2: Direct Materials Price Variance

The direct materials price variance is calculated using the formula: \[ \text{Direct Materials Price Variance} = (\text{Actual Purchase Price} - \text{Standard Purchase Price}) \times \text{Actual Quantity Purchased} \] Substituting the values: \[ \text{Direct Materials Price Variance} = (2.30 - 2.10) \times 1115000 = 222999.9999999997 \]

Step 3: Direct Materials Quantity Variance

The direct materials quantity variance is calculated as follows: \[ \text{Direct Materials Quantity Variance} = (\text{Actual Quantity Used} - \text{Standard Quantity for Sets Produced}) \times \text{Standard Purchase Price} \] Substituting the values: \[ \text{Direct Materials Quantity Variance} = (1000000 - 970000) \times 2.10 = 63000.0 \]

Final Answer

  • Total Cost of Purchases: \( 2564500.0 \)
  • Direct Materials Price Variance: \( 222999.9999999997 \)
  • Direct Materials Quantity Variance: \( 63000.0 \)

Thus, the final answers are: \[ \boxed{2564500.0} \] \[ \boxed{222999.9999999997} \] \[ \boxed{63000.0} \]

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