Question

Problem 9-21 Multiple Products, Materials, and Processes [LO9-4, LO9-5] 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 X442 Y661 Sintering Finishing Alpha6 3.0 kilos 2.0 liters 0.30 hours 1.20 hours Zeta7 5.0 kilos 4.0 liters 0.40 hours 1.20 hours Information relating to materials purchased and materials used in production during May follows: Material Purchases Purchase Cost Standard Price Used in Production X442 14,900 kilos $37,250 $2.30 per kilo 9,400 kilos Y661 15,900 liters $19,080 $1.30 per liter 13,900 liters The following additional information is available: The company recognizes price variances when materials are purchased. The standard labor rate is $23.00 per hour in Sintering and $19.50 per hour in Finishing. During May, 1,250 direct labor-hours were worked in Sintering at a total labor cost of $29,000, and 2,940 direct labor-hours were worked in Finishing at a total labor cost of $63,210. Production during May was 1,500 Alpha6s and 1,000 Zeta7s. Required: 1. Complete the standard cost card for each product, showing the standard cost of direct materials and direct labor. 2. Compute the materials price and quantity variances for each material. 3. Compute the labor rate and efficiency variances for each operation.

Answer 1

1. the standard cost card for each product, showing the standard cost of direct materials and direct labor.
		Standard Qty or Hour		Standard Price	Standard Cost
		Alpha6	Zeta7		Alpha6	Zeta7
Direct Material	X442	3.00	5.00	$                2.30	$             6.90	$        11.50
Direct Material	Y661	2.00	4.00	$                1.30	$             2.60	$          5.20
Direct Labor	Sintering	0.30	0.40	$              23.00	$             6.90	$          9.20
Direct Labor	Finishing	1.20	1.20	$              19.50	$           23.40	$        23.40
Total Cost					$           39.80	$       49.30
2. the materials price and quantity variances for each material.
	Standard			Actual			Price Varaince	Quantity Variance
	Quantity	Rate	Value	Quantity	Rate (See working below-2)	Value	(Standar Rate-Actual Rate)*Purchase Quantity	(Actual Q-Standard Q)*Standard Price
X442 (see below working-1)	9,500	$                   2.30	$                        21,850	9,400	$             2.50	$     23,500	$                            -2,980	$                       -230
Y661 (see below working-1)	7,000	$                   1.30	$                           9,100	13,900	$             1.20	$     16,680	$                              1,590	$                     8,970
	16,500		$                        30,950	23,300		$     40,180
Rawmaterial Required: 1
		Standard Per Unit required		Standard total Unit required
	Production	X442	Y661	X442	Y661
Alpha6	1,500	3.00	2.00	4,500	3,000
Zeta7	1,000	5.00	4.00	5,000	4,000
Total				9,500	7,000
Working: 2
	Purchase	Purchase Cost	Per unit
X442	14,900	$               37,250	$                             2.50
Y661	15,900	$               19,080	$                             1.20
2.the labor rate and efficiency variances for each operation.
	Standard			Actual			Labor Rate	Labor Efficiency
	Hour	Rate	Value	Hour	Rate (See working below-2)	Value	(Standar Rate-Actual Rate)*Purchase Quantity	(Actual Q-Standard Q)*Standard Price
Sintring (see below working-1)	850	$                 23.00	$                        19,550	1,250	23.20	$     29,000	$                               -250	$                     9,200
Finishing (see below working-1)	3,000	$                 19.50	$                        58,500	2,940	21.50	$     63,210	$                            -5,880	$                    -1,170
	3,850		$                        78,050	4,190		$     92,210
Working: 1
		Standard Per Unit required		Standard total Unit required
	Production	Sintering	Finising	Sintering	Finising
Alpha6	1,500	0.30	1.20	450	1,800
Zeta7	1,000	0.40	1.20	400	1,200
Total				850	3,000
Working: 2
	Hour	Total Labor Cost	Per Hour
Sintering	1,250	$               29,000	$                           23.20
Finishing	2,940	$               63,210	$                           21.50