Question

Ch 08 Ex 8-15 Saved Help Save & Exit Submit Check my work The following describes production activities of Mercer Manufacturing for the year. 15 points Actual direct materials used 20,000 lbs. at $4.25 per lb. 7,265 hours for a total of Actual direct labor used $140,941 Actual units produced 42,030 eBook Hint Budgeted standards for each unit produced are 0.50 pound of direct material at $4.20 per pound and 10 minutes of direct labor at $20.40 per hour. Ask Print References AH = Actual Hours SH = Standard Hours AR = Actual Rate SR = Standard Rate AQ = Actual Quantity SQ = Standard Quantity AP = Actual Price SP = Standard Price (1) Compute the direct materials price and quantity variances and classify each as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance. Round "Cost per unit" answers to 2 decimal places.) (2) Compute the direct labor rate and efficiency variances and classify each as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.)

Answer 1

SQ = Actual units (X) Standard quantity per unit. Standard Qunatity = 42030 X 0.5 = 21015 Particulars Direct Material SQ 21015 SP $4.20 AQ AP 20000 $4.25 ==>> SQ X SP - $88,263 SQ = Standard Quantity for Actual output SP = Standard Price per Raw material AQ = Actual Quantiity consumed AP = Actual Price per Raw material

Actual Cost AQ X AP 20000 X $4.25 $85,000 sp se Standard cost AQ 20000 X X $ 84,000.00 SP $4.20 Standard Cost SQ X SP 21015 X $4.20 $88,263.00 $ (1,000)| $ 4,263 Direct Material Price Variance Direct Material Quantity vaiance Total Direct Material Cost Variance $ (1,000) $ 4,263 $ 3,263 Unfavorable Favorable Favorable Direct Material Price Variance = (AQ * SP) - (AQ * AP) Direct Material Qunatity Variance = (SQ * SP) - (AQ * SP) Total Direct Material Cost Variance = ( SQ * SP ) - (AQ * AP)

Hours per unit = 10 / 60 = 0.17 hour SH = Actual units (X) Standard hours per unit. | Standard Hors = 42030 X 0.17 = 7145| Actual Rate = $ 140,941 / 7,265 = $ 19.4 Particulars Direct Labor SH 7145 SR $20.40 A H AR 7265 $19.40 ===>> SH X SR = $145,760 SH = Standard Hours per Actual Output SR = Standard Rate per Hour AHP = Actual Hours Paid AR = Actual Rate per Hour.

X AH 7265 Actual Cost X AR X $19.40 $140,941 AH 7265 SR $20.40 SH 7145.1 Standard Cost X X $145,760.04 SR $20.40 $ 148,206.00 $ 7,265 $(2,445.96) Direct Labor Rate Variance Direct Labor Efficiancy Variance Total Labor Cost Variance $ $ $ 7,265 (2,446) 4,819 Favorable Unfavorable Favorable Direct Labor Rate Variance Direct Labor Efficiancy Variance Total Labor Cost Variance = (AH * SR ) - (AH * AR ) = (SH * SR) - (AH * SR) = ( SH * SR) - (AH * AR)