Question

Cardinal Company has determined the following standard cost data necessary to manufacture one unit of its primary product Direct Materials.... (6 pounds Direct labor. hours 520) 515) payroll costs for direct labor During 20X1. Cardinal produced only 1 unit of product. This unit required 7 pounds of direct material a total of pounds were purchased at a cost of $18 per pound. In addition to during 201 were 5130/10 hours $13 per hour) Required: Answer the following questions, indicating BOTH the dollar amount of each variance and whether each variance is FAVORABLE (F) or UNFAVORABLE(U) The materials price variance was 5 The materials efficiency (usage variance was The labor rate (price) variance was The labor efficiency (usage) variance was The total cost of the unit completed in 20%1 and transferred from Work in Process to Finished Goods was

Answer 1

1. Material price variancez Actual quantry (Standard price - used. Actual price). Z e 7 pounds. ($ 20 - $18) : $14 Favourable. 2. Material usage variance ? standard pricel Standard quantity - Actual guantity used € 2 $ 20 ( 6 - 7) $20 unfavourable,

3. Labour rate variance e, i to Actual hours standard rate - - Actual rate) z 10 hrs ( $15 - $13). 2 $20 Favourable 4 Labour efficiency usage variance r O ODT Standard Tate Standord homes moni ish o ritorni ro - Actual hours) Drogo opore $ 15 ( 8-10) < $30 un favourable. ro 5. Total cost of unit complets - Material Labour cost cost s. Cactual ) SETTOOLS Come | 7 pounds x $ 18)+ (*) = $126 +130 a $25% 103