Question

New Jersey Valve Company manufactured 8,000 units during January of a control valve used by milk processors in its Camden plant. Records indicated the following: Direct labor Direct material purchased Direct material used 33, 100 hr. at $14.10 per hr. 25,000 lb. at $2.40 per lb. 23,500 lb. The control valve has the following standard prime costs: Direct material 3 lb. at $2.30 per lb. Direct labor 4 hr. at $14.50 per hr. Standard prime cost per unit $ 6.90 58.00 $64.90 Required: 1. Prepare a schedule of standard production costs for January, based on actual production of 8,000 units 2. For the month of January, compute the following variances. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a schedule of standard production costs for January, based on actual production of 8,000 units. NEW JERSEY VALVE COMPANY: CAMDEN PLANT Schedule of Standard Production Costs Based on 8,000 Units For the Month of January Standard Costs Direct material Direct labor Total standard production costs

Answer 1

Answer

• Requirement 1

Based on 8000 units
	Standard cost
Direct Materials [8000 units x $ 6.90]	$55,200
Direct Labor [8000 units x $58.00)	$464,000
Total Standard production cost	$519,200

• Requirement 2

DM Price Variance

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                                2.30	-	$                       2.40	)	x	23500
	-2350
	Variance		$              2,350.00			Unfavourable-U

DM Quantity Variance

Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	24000	-	23500	)	x	$                           2.30
	1150
	Variance		$              1,150.00			Favourable-F

DM Purchase price Variance

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                                2.30	-	$                       2.40	)	x	25000
	-2500
	Variance		$              2,500.00			Unfavourable-U

DL Rate Variance

Labor Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                              14.50	-	$                    14.10	)	x	33100
	13240
	Variance		$            13,240.00			Favourable-F

DL Efficiency Variance

Labour Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	32000	-	33100	)	x	$                        14.50
	-15950
	Variance		$            15,950.00			Unfavourable-U