Question

EX5

Exercise 5 Indi Co. makes zollies out of a special type of rubber. During the month, Indi made 6400 zollies using 13440 kilos of rubber. The rubber cost $580608. During the month, Indi also incurred a direct labor cost of $414720 having worked 46080 direct labor hours. Indi's standard costs include 2 kilos of rubber at a cost of $48 per kilo. The standard direct labor time is 8 hours per zollie at a standard labor rate of $10 per hour. Unfavorable What is the actual price of material per kilo? What is the standard quantity given the number of zollies produced? What is the amount of material price variance? Is the MPV favorable or unfavorable? What is the amount of material quantity (efficiency) variance? Is the MQV favorable or unfavorable? What is the actual labor rate? What is the standard hours allowed for the number of zippos made? What is the amount of labor rate (price) variance? Is the MPV favorable or unfavorable? What is the amount of labor efficiency (quantity) variance? Is the MQV favorable or unfavorable? Favorable Favorable

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Answer 1

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Indi	Amount $	Note
Rubber cost	580,608.00	A
Rubber used (kilo)	13,440.00	B
Actual price per kilo of rubber	43.20	C= A/B
Zollies produced	6,400.00	D
Standard input per Zollie	2.00	E
Standard quantity for Zollies	12,800.00	F=D*E
Rubber used (kilo)	13,440.00	See B
Standard Price	48.00	G
Actual Quantity of Input, at Standard Price	645,120.00	H=B*G
Actual Rubber cost	580,608.00	I
Material Price Variance	64,512.00	J=H-I
MPV is favorable
Standard quantity for Zollies	12,800.00	See F
Standard Price	48.00	See G
Standard Price allowed for Actual Output at Standard Price	614,400.00	K=F*G
Actual Quantity of Input, at Standard Price	645,120.00	See H
Material Quantity Variance	30,720.00	L=H-K
MQV is unfavorable
Labor cost	414,720.00	M
Labor Hour used	46,080.00	N
Actual Labor rate	9.00	O=M/N
Zollies produced	6,400.00	See D
Standard Labor hour required per Zollie	8.00	P
Standard Labor hour allowed for Zollies	51,200.00	Q=P*D
Labor Hour used	46,080.00	See N
Standard Rate	10.00	R
Actual Labor cost, at Standard Price	460,800.00	S= N*R
Actual Labor cost	414,720.00	See M
Labor Rate Variance	46,080.00	T=S-M
Labor Rate Variance is favorable
Standard Labor hour allowed for Zollies	51,200.00	See Q
Standard Rate	10.00	See R
Standard Price allowed for Actual Output at Standard Price	512,000.00	U= Q*R
Actual Labor cost, at Standard Price	460,800.00	See S
Labor Efficiency Variance	51,200.00	V= U-S
Labor Efficiency Variance is favorable