Question

New Jersey Valve Company manufactured 8,300 units during January of a control valve used by milk processors in its Camden plant. Records indicated the following:

Direct labor	34,100	hr. at $14.80 per hr.
Direct material purchased	29,000	lb. at $3.20 per lb.
Direct material used	24,600	lb.

The control valve has the following standard prime costs:

Direct material	3	lb. at $3.10 per lb.	$	9.30
Direct labor	4	hr. at $15.20 per hr.		60.80
Standard prime cost per unit			$	70.10

Required:

1. Prepare a schedule of standard production costs for January, based on actual production of 8,300 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 8,300 units. NEW JERSEY VALVE COMPANY: CAMDEN PLANT Schedule of Standard Production Costs Based on 8,300 Units For the Month of January Standard Costs Direct material Direct labor Total standard production costs

Answer 1

New Jersey Valve Company Requirement 1 Schedule of Standard Production Costs Based on 8,300 Units For the Month of January Standard Costs Direct material 77190 Direct labor 504640 Total standard production costs 581830 8,300 units x 3 lb. x $3.10 = $77,190 8,300 units x 4 hr. x $15.20 = $504,640 Requirement 2 a. Direct-material price variance = (AQ X AP) -(AQ SP) = (24,600 x $3.20)-(24,600 x $3.10) = $2,460 Unfavorable b.Direct-material quantity variance = (AQ x SP) -(SQ X SP) = (24,600 × $3.10) - (24,900* x $3.10) = $930 Favorable 8,300 units x 3 lb. per unit = 24,900 lb c.Direct-material purchase price variance = (PQ X AP) -(PQ XSP) = (29,000 $3.20) -(29,000 $3.10) = $2,900 Unfavorable d.Direct-labor rate variance = (AH XAR) -(AH X SR) = (34,100 $14.80) -(34,100 x $15.20) = $13,640 Favorable e.Direct-labor efficiency variance = (AH X SR) -(SH X SR) = (34,100 $15.20) -(33,200* x $15.20) = $13,680 Unfavorable 8,300 units x 4 hr. per unit = 33,200 hr.