Question

Could you explain how to solve required 1-3?

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): X442 Product Alpha 6 Zeta7 Raw Material Y661 1.5 kilos 2.5 liters 3.5 kilos 3.5 liters Standard Labor Time Sintering Finishing 0.20 hours 0.90 hours 0.35 hours 0.80 hours Information relating to materials purchased and materials used in production during May follows: Material X442 Purchase Purchases Cost 14,700 kilos $64,680 15,700 liters $23,550 Standard Price $4.20 per kilo $1.60 liter Used in Production 9,200 kilos 13,700 liters Y661 The following additional information is available: a. The company recognizes price variances when materials are purchased. b. The standard labor rate is $22.00 per hour in Sintering and $20.50 per hour in Finishing. c. During May, 1,200 direct labor-hours were worked in Sintering at a total labor cost of $27,840, and 2,920 direct labor-hours were worked in Finishing at a total labor cost of $65,700. d. Production during May was 2,200 Alphabs and 1,700 Zeta7s. Required: 1. Complete the standard cost card for each product, showing the standard cost of direct materials and direct labor. 2. Compute the materials price and quantity variances for each material. 3. Compute the labor rate and efficiency variances for each operation.

Answer 1

Statement showing Standard cost Card
Alpha8:
Direct materials-X342	1.5	kilos	4.2	per kilo	$6.30
Direct materials-Y561	2.5	liters	1.6	per liter	$4.00
Direct labor-Sintering	0.2	hours	22	per hour	$4.40
Direct labor-Finishing	0.9	hours	20.5	per hour	$18.45
Total					$33.15
Zeta9:
Direct materials-X342	3.5	kilos	4.2	per kilo	$14.70
Direct materials-Y561	3.5	liters	1.6	per liter	$5.60
Direct labor-Sintering	0.35	hours	22	per hour	$7.70
Direct labor-Finishing	0.8	hours	20.5	per hour	$16.40
Total					$44.40

Direct Materials Variances—Material X342:
	Standard Rate	-	Actual Rate	X	Actual Quantity	=	Variance
Materials price variance	4.2		4.4	X	14700	=	2940	UN Favourable
	Std Qty	-	Actual Qty	X	Std Rate	=	Variance
Material Qty Variance	9250	-	9200	X	4.2	=	210	Favourable
* Actual Rate = 64680/14700= 4.40, Std Qty= (1.5X 2200+3.5X1700)=9250

Direct Materials Variances—Material Y561
	Standard Rate	-	Actual Rate	X	Actual Quantity	=	Variance
Materials price variance	1.6		1.5	X	15700	=	1570	Favourable
	Std Qty	-	Actual Qty	X	Std Rate	=	Variance
Material Qty Variance	11450	-	13700	X	1.6	=	3600	UnFavourable
* Actual Rate = 23550/15700= $1.50, Std Qty:=(2.5X 2200+3.5X 1700)=11450Ltre

Direct Material Price Variance = 2940UF+1570 Fav= $1370 Uf

Direct Material Quantity VAriance=210 Fav+3600 UNF= $3390 UF

Direct Labour Variance- Sintering
	Standard Rate	-	Actual Rate	X	Actual Hours	=	Variance
Labour Rate Variance	22		23.2	X	1200	=	1440	UN Favourable
	Std Qty	-	Actual Hour	X	Std Rate	=	Variance
Labour Efficiency Variance	1035	-	1200	X	22	=	3630	UN Favourable
* Actual Rate = 27840/1200= $23.20, Std Qty= (0.20X 2200+0.35X1700)=1035 Hour
Direct Labour Variance- Finishing
	Standard Rate	-	Actual Rate	X	Actual Hours	=	Variance
Labour Rate Variance	20.5		$21	X	2920	=	1460	UN Favourable
	Std Qty	-	Actual Hour	X	Std Rate	=	Variance
Labour Efficiency Variance	3340	-	2920	X	20.5	=	8610	Favourable
* Actual Rate = 65700/2920= $22.5, Std Qty= (0.90X 2200+0.80X1700)=3340 Hour

Labour Rate Variance= 1440 UF+1460UF=$2900 UF

Labour Efficiency Variance= 3630UF+8610F=$4980 F