Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct...
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Accounting
Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labour standards for one unit of Zoom follow: The budgeted fixed overhead cost is $14,615 per month. The denominator activity level of the allocation base is 800 direct labour-hours. During the most recent month, the following activity was recorded: a. 9,500 kilograms of material were purchased at a cost of $2.21 per kilogram. b. A total of 850 hours of direct labour time was recorded at a total labour cost of $9,190. c. The variable overhead cost was $1,580, and the fixed overhead cost was $14,704. Assume that the company produced 1,300 units, using 6,600 kilograms of material in the production process. (The rest of the material purchased remained in inventory.) Required: 1. Compute the direct materials price and quantity variances for the month. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)
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