Question

Sharp Company manufactures a product for which the following standards have been set: Standard Quantity or Hours 3 feet ? hours Standard Price or Rate $5 per foot ? per hour Standard Cost $15 Direct materials Direct labor During March, the company purchased direct materials at a cost of $44,100, all of which were used in the production of 2,350 units of product. In addition, 4,800 hours of direct labor time were worked on the product during the month. The cost of this labor time was $40,800. The following variances have been computed for the month: Materials quantity variance Labor spending variance Labor efficiency variance $1,500 U $3,200 U $ 800 U Required: 1. For direct materials: a. Compute the actual cost per foot for materials for March. (Round your answer to 2 decimal places.) X Answer is complete but not entirely correct. Actual cost $ x per foot b. Compute the price variance and the spending variance. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance)) Answer is not complete. $ 1 Price variance Spending variance

Answer 1

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

-1500 = (2350*3*5-5X)

5X = 36750

X(actual quantity) = 7350

Actual cost per foot = 44100/7350 = 6 per foot

1b) Material price variance = (5-6)*7350 = 7350 U

Material spending variance = (2350*15-44100) = 8850 U

2a) Labor price variance = (Standard price-actual price)actual hour

-2400 = (X*4800-40800)

-4800X = -38400

Standard price = 8

2b) Labor efficiency variance = (standard hour-actual hour)Standard rate

-800 = (X*8-4800*8)

-8X = -37600

x(Standard hour) = 4700 Hour

2c) Standard hour per unit = 2 hour per unit