Question

Direct Materials and Direct Labor Variance Analysis Shasta Fixture Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 30 employees. Each employee presently provides 35 hours of labor per week. Information about a production week is as follows: Standard wage per hour $13.20 Standard labor time per unit 20 min. Standard number of lbs. of brass 1.3 lbs. Standard price per Ib. of brass $12.25 Actual price per lb. of brass $12.50 12,051 lbs. Actual lbs. of brass used during the week Number of units produced during the week 9,000 $13.60 Actual wage per hour Actual hours for the week (30 employees x 35 hours) 1,050 Required: a. Determine the standard cost per unit for direct materials and direct labor. Round the cost per unit to two decimal places. Direct materials standard cost per unit $ Direct labor standard cost per unit Total standard cost per unit b. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Round your answers to the nearest whole dollar. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Direct Materials Price Variance Direct Materials Quantity Variance Total Direct Materials Cost Variance c. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Round your answers to the nearest whole dollar. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Direct Labor Rate Variance

Answer 1

a) Direct materials standard cost per unit 1.3*$12.25 $15.93 Direct labor standard cost perf unit 20/60*$13.20 = $4.4 Total standard cost per unit $15.93 + $4.4 $20.33 b) Direct materials price variance (Actual price-Standard price) Actual quanity Direct materials price variance ($12.5-$12.25)*12,051 Direct materials price variance $3,013 Unfavorable Standard quantity allowed 9,000*1.3 = 11,700 Direct materials quantity variance (Actual quanity-Standard quantity) Standard price Direct materials quantity variance (12,051-11,700)*$12.25 Direct materials quantity variance = $4,300 Unfavorable Total Direct materials cost variance = (Actual price Actual quantity)-(Standard price*Standard quantity) Total Direct materials cost variance ($12.5*12,051) - ($12.25 *11,700) Total Direct materials cost variance 150,637.5 - $143,325 Total Direct materials cost variance $7,313 Unfavorable

b) Direct labor rate variance (Actual rate-Standard rate) Actual hours Direct labor rate variance ($13.60-$13.20)*1,050 Direct labor rate variance $420 Unfavorable Standard hours allowed 9,000*20/60 3,000 hours Direct labor efficiency variance (Actual hours-Standard hours)*Standard rate Direct labor efficiency variance (1,050-3,000)*$13.2 Direct labor efficiency variance = -$25,740 Favorable Total Direct labor cost variance (Actual hours*Actual rate)-(Standard hours Standard rate) Total Direct labor cost variance (1,050*$13.60)- (3,000*$13.20) Total Direct labor cost variance $14,280-$39,600 Total Direct labor cost variance -$25,320 Favorable