Question

Part of your company's accounting database was destroyed when Godzilla attacked the city. You have been able to gather the following data from your files. Reconstruct the remaining information using the available data. All of the raw material purchased during the period was used in production. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance). Round "per unit" answer values to 2 decimal places.) $ Direct Labor per hour hours per unit 2.50 hours 18.00 per hour 8,500 units Direct Material 14.00 per Ib lbs per unit Ibs per unit 13.00 per lb 8,500 units 61,200 F $ Standard price or rate per unit of input Standard quantity per unit of output Actual quantity used per unit of output Actual price or rate per unit of input Actual output Direct-material price variance Direct-material quantity variance Total direct-material variance Direct-labor rate variance Direct-labor efficiency variance Total direct-labor variance $ $ $ 44,400 F $ $ 72,250 F 51,000 F

Answer 1

FIRECT LABOR 17.00 per hour 3.00 hours per unit 2.5 hours per unit 18.00 per hour 8500 units note 5 note 6 note 3 note 1 Standard price or rate per unit of input Standard quantity per unit of output Actual quantity used per unit of output actual price or rate per unit of input actual output direct - material price variance direct - material quantity variance total direct material variance direct labor rate variance direct labor efficiency variance total direct labor variance DIRECT MATERIAL $ 14.00 per lb 7.06 lbs per unit 7.20 lbs per unit $ 13.00 per lb 8500 units $ 61,200 F $ 16,800 $ 44,400 note-2 note 4 $ $ $ 21,250U 72,250 F 51,000F

note 1 Direct material price variance = (Standard price -actual price) x actual quantity used 61200 = (14-13)x actual quantity used actual quantity used = 61200/(14-13) 61200/1 61,200 Actual quantity used per unit of output = Actual quantity used / actual output 61,200/8500 7.20 note-2 Direct material variance = direct material price variance + direct material quantity variance 44400 (F) = 61,200 (F) - direct material quantity variance direct material quantity variance= 16,800 (U) unfavorable

Note 3 direct material quantity variance= (actual quantity used -standard quantity) x standard price per unit of input 16,800 (U) = (61,200 - standard quantity ) x 14 1200 = 61,200 - standard quantity standard quantity = 60,000 Standard quantity per unit of output = standard quantity / actual output = 60,000/8500 7.06 Note 4 total direct labor variance = direct labor rate variance + direct labor efficiency variance 51000 (F) = direct labor rate variance + 72,250 (F) direct labor rate variance = 21250 (0)

note 5 direct labor rate variance = (actual rate per unit of input - standard rate per unit of input) x actual hours used 21250 (u) = (18 - standard rate per unit of input) x (2.5 hour x 8500 units) 21250 (u) = (18-standard rate per unit of input) x 21250 21250/21250 = (18 - standard rate per unit of input) 1 = ( 18 - standard rate per unit of input) Standard rate per unit of input= $ 17.00 per hour note 6 direct labor efficiency variance = (standard hours -actual hours) x standard rate per unit of input 72,250 (f) = (standard hours - 8,500 x 2.5) )x 17 72,250 (f) = (standard hours - 21250 ) x 17 4250 = standard hours - 21250 standard hours = 25,500 Standard quantity per unit of output = Standard hours /actual output 25500/8500 3.00 hours per unit Please comment if you have any doubt Please give feedback