Question 2: Input price and input efficiencyvariances
The budgeted and actual data for direct materials and labor are asfollows:
| Budgeted | Actual |
| DM price | $1 per pound | $0.75 per pound |
| DM quantity per unit | 5 pounds per unit | 6 pounds per unit |
| DL price | $8 per hour | $11 per hour |
| DL quantity per unit | 0.3 hours per unit | 0.4 hours per unit |
Actual sales volume is 100 units. Budgeted sales volume is 80units.
a) Without computations, characterize the followingvariances as favorable or unfavorable:
input price variance for DM F U
input efficiency variance for DM F U
input price variance for DL F U
input efficiency variance for DL F U
b) Compute the input price and input efficiency variancesfor DM and DL.
As a preliminary step, compute actual input quantity (total poundsor hours we actually used) and flexible budget input quantity(total pounds or hours we should have used for actualoutput):
actual input quantity for DM= pounds
flexible budget input quantity for DM= pounds
actual input quantity for DL= hours
flexible budget input quantity for DL= hours
Next, compute the variances. Enter favorable variances as apositive number and unfavorable variances as a negative number. DoNOT enter F or U.
input price variance for DM = $
input efficiency variance for DM = $
input price variance for DL = $
input efficiency variance for DL = $
