Talia Company produces a single product. The company has set standards as follows for materials and labour:
Direct Materials | Direct Labour | ||
Standard quantity or hours per unit | ? kilograms | 1.25 hours | |
Standard price or rate. | ? per kilogram | $ | 10 per hour |
Standard cost per unit | ? | $ | 11.25 |
During the past month, the company purchased 3,000 kilograms of direct materials at a cost of $8,250. All of this material was used in the production of 700 units of product. Direct labour cost totalled $6,825 for the month. The following variances have been computed:
Materials quantity variance | $ | 600 | U |
Total materials variance | $ | 150 | F |
Labour efficiency variance | $ | 2,250 | F |
a) | materials quantity variance | 600 | U | |||||||
total materials variance | 150 | F | ||||||||
materials price variance | 750 | F | ||||||||
materials price variance | ||||||||||
(actual price - standard price)*AQ | ||||||||||
(8,250 - 3000*x)= | 750 | |||||||||
(750+8250)/3000 | ||||||||||
3 | ||||||||||
materials quantity variance | ||||||||||
(AQ -SQ)*SP | ||||||||||
(3000 - 700*x)*3= | 600 | |||||||||
9000 -2100x = | 600 | |||||||||
x = | (9000-600)/2100 | |||||||||
4 | ||||||||||
a. | Standard price per kilogram for materials | 3 | ||||||||
b. | standard quantity allowed for materials for the month's production | 2800 | kgs | |||||||
c. | standard quantity of materials allowed per unit of product | 4 | kgs per unit | |||||||
b) | labor efficiency variance | |||||||||
(Ah - sh)*standard price | ||||||||||
(x - 700*1.25)*10= | 2250 | |||||||||
10 x - 8750 = | 2250 | |||||||||
x = | (8750-2250)/10 | |||||||||
650 | ||||||||||
actual direct labor cost per hr for the month | 6825/650 | |||||||||
10.5 | ||||||||||
labor rate variance | ||||||||||
(actual rate - standard rate)*actual hrs | ||||||||||
(10.5-10)*650 | ||||||||||
325 | U | |||||||||
actual direct labor cost per hr for the month | 10.5 | |||||||||
labor rate variance | 325 | U | ||||||||
Talia Company produces a single product. The company has set standards as follows for materials and...
Talia Company produces a single product. The company has set standards as follows for materials and labour: Direct Materials Direct Labour Standard quantity or hours per unit ? kilograms 1.25 hours Standard price or rate. ? per kilogram $ 10 per hour Standard cost per unit ? $ 11.25 During the past month, the company purchased 3,000 kilograms of direct materials at a cost of $8,250. All of this material was used in the production of 700 units of product....
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