Question

Sharp Company manufactures a product for which the folosing standards have been set Standard Quantity Standard Price Standard Direct materials Direct labor feet 55 per foot s 15 During March. The company purchased det materials at a cost of $54 285, all of which were used in the production of 3.200 units of product in addition, 4.900 rect labor-hours were worked on the product during the month. The cost of the labor time was $44100 The following variances have been computed for the month Hatartats quantity variance Labor spending variance Labor ticiency variance Required: 1 For direct materiais a. Comoule the actual com per foot of materials for March Compute the price variance and the spending variance 2 Far direct labor a. Compute the standard deco rate per hour b. Compute the standhours lowed for the month's production t. Compute the standard hours allowee n of product Complete this question by entering your answers in 14 For direct material compute the actual cont per material to Marchand your a rt decimal places

Answer 1

1)

Materials quantity variance = (Actual quantity-Standard quantity)*Standard price

1,350 = (Actual quantity-(3,200*3))*$5

Actual quantity - 9,600 = $1,350/5

Actual quantity - 9,600 = 270

Actual quantity = 9,600 + 270

Actual quantity = 9,870

Actual cost per foot = $54,285/9,870

Actual cost per foot = $5.5 per foot

Material price variance = (Actual price-Standard price)*Actual quantity

Material price variance = ($5.5-$5)*9,870

Material price variance = $4,935 Unfavorable

Spending variance = ( Actual price*Actual Quantity) - (Standard Price*Standard Quantity)

Material spending variance = ($5.5*9,870)-($5*9600)

Material spending variance = $54,285 - $48,000

Material spending variance = $6,285 Unfavorable

2)

Labor rate variance = Labor spending variance - Labor efficiency variance

Labor rate variance = $3,300 - $850

Labor rate variance = $2,450 Unfavorable

Labor rate variance = (Actual rate*Actual hours) - (Standard rate*Actual hours)

$2,450 = Actual labor cost -(Standard rate*4,900)

Standard rate*4,900 = $44,100-$2,450

Standard rate*4,900 = $41,650

Standard rate = $8.5 per hour

Labor efficiency variance = (Actual hours - Standard hours)*Standard rate

$850 = (4,900-Standard hours)*$8.5

4,900-Standard hours = $850/$8.5

4,900-Standard hours = 100

Standard hours = 4,900 -100

Standard hours = 4,800 hours

Standard hours allowed per unit of product = 4,800/3,200

Standard hours allowed per unit of product = 1.5 hours