Question

Mickley Corporation produces two products, Alpha6s 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): Raw Material Standard Labor Time Sintering e.20 hours e.40 hours Product X442 Y661 2.5 liters 4.0 liters Finishing e.8e hours 1.20 hours Alpha6 Zeta7 2.5 kilos 4.5 kilos Dok ences Information relating to materials purchased and materials used in production during May follows Purchase Standard Price Used in Cost $53,720 $21,840 Material X442 Purchases Production 10,300 kilos 14,800 1iters $3.20 per kilo $1.40 per 1iter 15,800 kilos 16,800 liters Y661 The following additional information is available: a. The company recognizes price variances when materials are purchased b. The standard labor rate is $23.00 per hour in Sintering and $22.00 per hour in Finishing c. During May, 1,380 direct labor-hours were worked in Sintering at a total labor cost of $34,500, and 3,030 direct labor-hours were worked in Finishing at a total labor cost of $72.720 d. Production during May was 2.400 Alpha6s and 1.000 Zeta7s

Answer 1

Material -X442
Std qty allowed (2400*2.5+1000*4.5)		$                    10,500
Actual qty purchased		$                    15,800
Actual qty used		$                    10,300
Std price		$                              3
Actual price (53720/15800)		$                              3
Material price variance = Actual qty purchased(Std price-Actual price)
		15800*(3.2-3.4)	$   3,160	F
Material Qty variance= Std price (Std qty-Actual qty)
		3.2*(10500-10300)	$      640	F
Material Y661
Std qty allowed (2400*2.5+1000*4)		$                    10,000
Actual qty purchased:		$                    16,800
Actual qty used:		$                    14,800
Std price		$                              1
Actual price (21840/16800)		$                              1
Material price variance = Actual qty purchased(Std price-Actual price)
		16800*(1.4-1.3)	$   1,680	F
Material Qty variance= Std price (Std qty-Actual qty)
		1.4*(10000-14800)	$   6,720	U
Labor-Sintering
Std Labor hours (2400*0.2+1000*0.4)		$                          880
Std rate:		$                            23
Actual Labor hours		$                      1,380
Actual (34500/1380)		$                            25
Labor rate variance: Actual hours (Std rate-Actual rate)
		1380*(23-25)	$   2,760	U
Labouor efficiency variance= Std rate(Std hours-Actual ho.urs)
		23*(880-1380)	$ 11,500	U
Labor-Finishing:
Std Labor hours (2400*0.8+1000*1.2)		$                      3,120
Std rate:		$                            22
Actual hours:		$                      3,030
Actual rate (72720/3030)		$                            24
Labor rate variance: Actual hours (Std rate-Actual rate)
		3030*(22-24)	$   6,060	U
Labor efficiency variance= Std rate(Std hours-Actual hours)
		22*(3120-3030)	$   1,980	F