Question

Sharp Company manufactures a product for which the following standards have been set: Standard Quantity Standard Price Standard or Hours or Rate Cost 3 feet $5 per foot $ 15 ? hours ? per hour Direct materials Direct labor During March, the company purchased direct materials at a cost of $64,440, all of which were used in the production of 3,500 units of product. In addition, 5,000 direct labor-hours were worked on the product during the month. The cost of this labor time was $47,500. The following variances have been computed for the month: Materials quantity variance Labor spending variance Labor efficiency variance $ 1,200 V $ 3,400 U $ 900 U Required: 1. For direct materials: a. Compute the actual cost per foot of materials for March. b. Compute the price variance and the spending variance. 2. For direct labor: a. Compute the standard direct labor rate per hour. b. Compute the standard hours allowed for the month's production. c. Compute the standard hours allowed per unit of product. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 2a. For direct labor, compute the standard direct labor rate per hour. (Round your answer to the nearest whole dollar.) 2b. For direct labor, compute the standard hours allowed for the month's production. (Do not round your intermediate value.) 2c. For direct labor, compute the standard hours allowed per unit of product. (Round your answer to 1 decimal place.) 2a. Standard direct labor rate per hour 2b. Standard hours allowed for the month's production 2c. Standard hours allowed per unit of product Req 1B Req2

Answer 1

1) Material quantity variance = (Standard qty-actual qty)Standard price

-1200 = (3500*3*5-5X)

5X = 53700

X(actual qty) = 10740

Actual Cost per foot = 64440/10740 = 6

2) Material price variance = (5-6)*10740 = 10740 U

Material spending variance = (3500*15-64440) = 11940 U

3) Labor efficiency variance = 3400-900 = 2500 U

Labor rate variance = (Standard rate-actual rate)actual hour

-2500 = (X*5000-47500)

-5000X = -45000

X(Standard rate) = 9 per hour

4) Labor efficiency variance = (Standard hour-actual hour)Standard rate

-900 = (X*9-5000*9)

-9X = -44100

X(Standard hour) = 4900 Hour

5) Standard hour per unit = 4900/3500 = 1.4 hour per unit