Question

Mickley Corporation produces two products, Alphabs 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): Product Alpha 6 Zeta7 Raw Material X442 Y661 2.0 kilos 1.5 liters 3.0 kilos 4.5 liters Standard Labor Time Sintering Finishing 0.10 hours 1.00 hours 0.30 hours 0.80 hours Information relating to materials purchased and materials used in production during May follows: Material X442 Purchases 14,200 kilos 15,200 liters Purchase Standard Cost Price $55,380 $3.70 per kilo $22,800 $1.60 per liter Used in Production 8.700 kilos 13,200 liters Y661 The following additional information is available: a. The company recognizes price variances when materials are purchased. The standard labor rate is $22.00 per hour in Sintering and $18.10 per hour in b. Finishing. c. During May, 1.200 direct labor-hours were worked in Sintering at a total labor cost of $27,240, and 2.870 direct labor-hours were worked in Finishing at a total labor cost of $60,270. d. Production during May was 1,700 Alphabs and 1,800 Zeta7s. Requied:

Answer 1

1)
	Std Qty or Hrs	Std. Price or Rate	Standard Cost
Alpha6:
DM X442	2	3.7	7.4
DM Y661	1.5	1.6	2.4
DL Sintering	0.1	22	2.2
DL Finishing	1	18.1	18.1
Total			30.1
Zeta7:
DM X442	3	3.7	11.1
DM Y661	4.5	1.6	7.2
DL Sintering	0.3	22	6.6
DL Finishing	0.8	18.1	14.48
Total			39.38
2)
DM Variances : Mat. X442
Material price Variance	((55380/14200)-3.7)*8700	1740	U	(actual price - std. price)*actual used
Material quantity Variance	((1700*2 + 1800*3) - 8700)*3.7	370	F	(Usage as per std. - actual used)* Std. price
DM Variances : Mat. Y661
Material price Variance	((22800/15200)-1.6)*13200	1320	F
Material quantity Variance	((1700*1.5 + 1800*4.5) - 13200)*1.6	4080	U
3)
DL Variances : Sintering
Labor rate Variance	((27240/1200)-22)*1200	840	U	(actual rate - std. rate)*actual hours
Labor efficiency Variance	((1700*0.1 + 1800*0.3) - 1200)*22	10780	U	(Hours as per std. - actual hours)* Std. rate
DL Variances : Finishing
Labor rate Variance	((60270/2870)-18.1)*2870	8323	U
Labor efficiency Variance	((1700*1 + 1800*0.8) - 2870)*18.1	4887	F