Question

Ironwood Company manufactures cast-iron barbeque cookware. During a recent windstorm, it lost some of its cost accounting records. Ironwood has managed to reconstruct portions of its standard cost system database but is still missing a few pieces of Information. Required: Use the information in the table to determine the unknown amounts. You may assume that Ironwood does not keep any raw materials on hand. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (.e., zero variance). Direct Materials Direct Labor 1.10 hr. 2.5 lb 4.20 perb $ 16.00 per hr Standard amount per pan produced Standard price Actual amount used per pan produced Actual price Actual number of pans produced and sold Direct materials price variance 120h $15.50 per hr. 4.10 per lb 2.500 pans 2.500 pans Direct materials quantity variance Direct materials spending vanance Direct labor rate variance Direct labor officiency variance Direct labor spending variance

Answer 1

Direct material price variance = (standard price - actual price)*actual quantity

=(4.2-4.1)*2500*2.4

=$600 F

Direct material quantity variance =(standard quantity- actual quantity)*standard price

=(2500*2.5-2500*2.4)*4.2

=$1,050 F

Direct material spending variance = 1650 F

Direct labor rate variance =(standard rate - actual rate)*actual hours

=(16-15.5)*2500*1.2

=$1500 F

Direct labor efficiency variance = (standard hours - actual hours)*standard price

=(2500*1.1 -2500*1.2)*16

=$4,000 U

Direct labor spending variance = $2,500 U