Question

Problem 10-10 Multiple Products, Materials, and Processes L010-1, LO10-2] 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 Product Alpha6 Zeta7 X442 1.2 kilos 3.0 kilos Y661 2.0 liters 4.0 liters Sintering 0.40 hours 0.10 hours Finishing 0.80 hours 6.68 hours Information relating to materials purchased and materials used in production during May follows Purchase Cost Standard Price Material X442 Y661 Purchases 14,580 kilos $60,980$4.00 per kilo 15,500 liters $27,900 $%1.90 per liter Used in Production 9,999 kilos 13,500 1iters The following additional information is available a. The company recognizes price variances when materials are purchased b. The standard labor rate is $21.00 per hour in Sintering and $19.50 per hour in Finishing C. During May, 1,250 direct labor-hours were worked in Sintering at a total labor cost of $28,750, and 2,900 direct labor- hours were worked in Finishing at a total labor cost of $62,350 d. Production during May was 2,000 Alpha6s and 2,250 Zeta7s

Answer 1

Direct labor rate variance - Sintering =)(Standard rate - Actual rate ) *Actual hours

= [21 - (28,750/1250)]*1250

= (21-23)*1250

= 2500 U

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

= [(2000*0.4)+(2,250*0.10)]-1250)*21

= (1025-1250)*21

= 4725 U

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