Question

Mickley Corporation produces two products, Alphabs and Zeta7s, which pass through two operations, Sintering and Finishing. Each of the products uses two raw materials-X442 and Y661. The company uses a standard cost system, with the following standards for each product (on a per unit basis): Product Alpha 6 Zeta 7 Raw Material X442 Y661 1.5 kilos 2.2 liters 3.5 kilos 4.4 liters Standard Labor Time Sintering Finishing 0.40 hours 0.80 hours 0.30 hours 0.90 hours Information relating to materials purchased and materials used in production during May follows: Standard Material X442 Y661 Purchase Purchases Cost 14,100 kilos $53, 580 15,100 liters $21,140 Used in Production 8, 600 kilos 13, 100 liters $3.60 per kilo $1.50 per liter The following additional information is available: a. The company recognizes price variances when materials are purchased. b. The standard labor rate is $18.00 per hour in Sintering and $18.00 per hour in Finishing. c. During May, 1,250 direct labor-hours were worked in Sintering at a total labor cost of $28,250, and 2,860 direct labor-hours were worked in Finishing at a total labor cost of $57,200. d. Production during May was 1,600 Alphabs and 1,800 Zeta7s.

Answer 1

Part 1 : standard Quantity or hours standard price or rate standard cost c=a*b Alpha 6: 1.50 kilos 2.20 liters 0.40 hours 0.80 hours 3.60 per kilos 1.50 per liters 18.00 per hour 18.00 per hour 5.40 3.30 7.20 14.40 30.30 Direct material - X442 Direct material - Y661 Direct - Sintering Direct- Finishing Total Zeta 7: Direct material - X442 Direct material - Y661 Direct - Sintering Direct - Finishing Total 3.50 kilos 4.40 liters 0.30 hours 0.90 hours 3.60 per kilos 1.50 per liters 18.00 per hour 18.00 per hour 12.60 6.60 5.40 16.20 40.80

Part 2: DIRECT MATERIAL - X442 quantity RATE per unit TOTAL STANDARD 8,700.00 3.60 31,320.00 (1600*1.5+1800*3.5) ACTUAL 8,600 32,680.00 3.80 53580/14100 material Purchase price variance (SP-AP) *QP |(3.6-3.8)* 14100 material QUANTITY variance (SQ - AQ)X SP|(8700-8600)*3.6 | 28600 | 360 |F || DIRECT MATERIAL - Y661 quantity STANDARD 11,440.00 |(1600* 2.2+1800*4.4) RATE per unit TOTAL 1.50 17,160.00 ACTUAL 18,340.00 13,100 1.40 21140/15100 material price variance material QUANTITY variance (SP-AP) *QP (1.5-1.4)* 15100 (SQ - AQ)X SP|(11440-13100)*1.5 1530 F | 2,490 U