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 price (rate) 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.) $ Direct Materials 2.5 lb. $ 4.20 per Ib. 2.4 Ib. $ 4.10 per lb. 2,500 pans Direct Labor 1.10 hr. 16.00 per hr. 1.20 hr. 15.50 per hr. 2,500 pans $ Standard amount per pan produced Standard price (rate) Actual amount used per pan produced Actual price (rate) Actual number of pans produced and sold Direct materials price variance Direct materials quantity variance Direct materials spending variance Direct labor rate variance Direct labor efficiency variance Direct labor spending variance

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and format. For detailed answer refer to the supporting sheet.

1 Answer Direct Material Direct Labour 2 3 Standard amount per pan produced 4Standard Price (rate) 5 Actual amount used per pan produced 6 Actual Price(rate) 2.5 lb 1.1 hr 4.2 Per lb 16 Per hr 1.2 hr 2.4 lb 4.1 Per Ib 15.5 Per hr 2500 Pans 7 Actual number of pans produced and sold 2500 Pans 8 Direct Material Price Variance 600 F 9 Direct Material Quantity Variance 1050 F L0 Direct Material Spending Variance 1650 F 1 Direct Labor Rate Variance 1500 F 4000 U 12 Direct Labor Effeciency Variance 13 Direct Labor Spending Variance 2500 U 4 15 Direct Material Price Variance (sactual price- standard price)* actual qty 16 (4.1-4.2)"(2500*2.4) 7600 Favourable 18 9 Direct Material qty variance (actual qty -standard qty)* standard price 20 -((2.4*2500)-(2.5*2500))*4.2 1 = 1050 Favourable 23 Direct material spending variance price variance material direct material gty variance 600F+ 1050F 24 25 1650 F

27 Direct Labour Rate Variance (actual rate-standard rate) * actual hours 28(15.5-16)*(1.2*2500) 29 1500 Favourable 30 31 Direct labour effeciency variance (actual hours-standard hours)* standard rate 32((2500*1.2)-(2500*1.1) ) *16 33 4000 Unfavourable 34 35 Direct labour spending variance direct labour rate variance+ direct labour effeciency variance 36 1500 F 4000 U 37 2500U 38 39