Question

Direct Materials and Direct Labor Variance Analysis Abbeville Fixture Company manufactures units in a small manufacturing facility. The units are made from brass. Manufacturing has 30 employees. Each employee presently provides 35 hours of labor per week. Information about a production week is as follows: $16.2 Standard wage per hour Standard labor time per unit Standard number of lbs. of brass 10 min. 2.1 lbs. $12 Standard price per lb. of brass Actual price per lb. of brass Actual lbs. of brass used during the week $12.25 18,169 Ibs. 8,400 Number of units produced during the week Actual wage per hour $16.69 Actual hours for the week (30 employees x 35 hours) 1,050 hrs. Required: a. Determine the standard cost per unit for direct materials and direct labor. Round the cost per unit to two decimal places. | Direct materials standard cost per unit Wh Direct labor standard cost per unit + Total standard cost per unit 8+

Answer 1

a.	Standard labor time per unit in hours = 10 / 60 = 1 / 6 hours
	Direct materials standard cost per unit ( Standard number of lbs. of brass * Standard price per lb. of brass = 2.1 * 12 )	25.20
	Direct labor standard cost per unit ( Standard labor time per unit in hours * Standard wage per hour = (1/6) * 16.2 )	2.70
	Total standard cost per unit	27.90

b.	Direct materials price variance = ( Actual price - Standard price ) * Actual quantity = ( 12.25 - 12 ) * 18169	4542	Unfavorable
	Standard quantity of direct materials for actual production = Number of units produced during the week * Standard number of lbs. of brass = 8400 * 2.1	17640
	Direct materials quantity variance = ( Actual quantity - Standard quantity ) * Standard price = ( 18169 - 17640 ) * 12	6348	Unfavorable
	Total direct materials cost variance = ( Actual quantity * Actual price ) - ( Standard quantity * Standard price ) = ( 18169 * 12.25 ) - ( 17640 * 12 )	10890	Unfavorable

c.	Direct labor rate variance = ( Actual rate - Standard rate ) * Actual hours = ( 16.69 - 16.2 ) * 1050	515	Unfavorable
	Standard hours for actual production = Number of units produced during the week * Standard labor hours per unit = 8400 * (1/6)	1400
	Direct labor time variance = ( Actual hours - Standard hours ) * Standard rate = ( 1050 - 1400 ) * 16.2	-5670	Favorable
	Total direct labor cost variance = ( Actual hours * Actual rate ) - ( Standard hours * Standard rate ) = ( 1050 * 16.69 ) - ( 1400 * 16.2 )	-5156	Favorable