Question 1: Calculate the material purchase price variance, which is
(actual price – standard price) × actual quantity of materials used
Question 2: Work out the actual hours worked, to the nearest hour, remembering that the direct labour usage variance is equal to:
(actual labour hours – standard labour rate hours) × standard labour rate
| Standard unit price of materials | £9.00 |
| Actual unit price of materials | £8.68 |
| Standard quantity of material for actual production (units) |
3,300 |
| Actual quantity of materials purchased and used (units) |
3,600 |
| Standard direct labour rate | £28.00 |
| Actual direct labour rate | £24.40 |
| Standard direct labour hours | 24,000 |
| Direct labour usage variance | £28,280 U = unfavourable or adverse |
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