Question

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 Sintering 0.20 hours Finishing Product X442 Y661 Alpha6 2.5 kilos 2.5 liters 0.90 hours 4.5 kilos 3.5 liters 0.30 hours 1.20 hours Zeta7 Information relating to materials purchased and materials used in production during May follows: Purchase Standard Price $2.40 per kilo $1.40 per liter Used in Material Purchases Production Cost 9,500 kilos 14,000 liters X442 15,000 kilos 16,000 liters $39,000 $20,800 Y661 The following additional information is available: a. The company recognizes price variances when materials are purchased. b. The standard labor rate is $23.00 per hour in Sintering and $20.00 per hour in Finishing. c. During May, 1,300 direct labor-hours were worked in Sintering at a total labor cost of $30,550, and 2,950 direct labor-hours were worked in Finishing at a total labor cost of $64,900. d. Production during May was 1,600 Alpha6s and 1,300 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

Answer with working is given below

Standard cost Standard quantity or Hours Standard price or Rate Alpha6 Direct Material - X442 Direct Material - Y661 Direct Labor- Sintering Direct Labor- Finishing Total $6.00 $2.40 kilos 2.50 per kilo $1.40 $3.50 litres per litre 2.50 $4.60 $23.00 hours 0.20 per hour $18.00 $20.00 hours 0.90 per hour $32.10 Zeta7 Direct Material X442 Direct Material - Y661 Direct Labor- Sintering Direct Labor- Finishing Total $2.40 per kilo $10.80 kilos 4.50 $4.90 $1.40 litres 3.50 per litre $23.00 $6.90 hours per hour 0.30 $24.00 $20.00 hours 1.20 per hour $46.60 Direct Material Variance X442 -$3,000 Unfavourable $840 Favourable Material rate variance Material Quantity variance Direct Material Variance Y661 Material rate variance Material Quantity variance $1,600 Favourable -$7,630 Favourable Material X442 Working note Actual Material cost Actual Quantity at Standard rate Standard Material Costs standard Standard Actual Actual Actual Standard Quantity Quantity X Rate X Rate Quantity х Rate $2.40 $22,800 Standard Qty at Std rate $2.60 15,000 $2.40 $23,640 9,500 9,850 Actual Quantity at Actual Rate $39,000 Actual Qty at Standard rate Direct Material Direct Material -$3,000 Unfavourable $840 Quantity variance price variance Favourable -$2,160 Unfavourable Total Direct Material cost Variance Material Y661 Working note Actual Material cost Actual Quantity at Standard rate Standard Material Costs Standard Actual Actual Standard Standard Actual Quantity Quantity Quantity X Rate Rate X Rate $1.40 $19,600 Standard Qty at Std rate $1.30 $20,800 Actual Qty at Standard rate $1.40 16,000 8,550 14,000 Actual Quantity at Actual Rate $11,970 Direct Material Direct Material $1,600 -$7,630 price variance Quantity variance Unfavourable Favourable -$6,030 Unfavourable Total Direct Material cost Variance Direct Labor Variance Sintering -$650 Unfavourable -$13,570 Unfavourable Labor rate variance Labor Efficiency variance Direct Labor Variance Finishing Labor rate variance -$5,900 Unfavourable $1,000 Favourable Labor Efficiency variance Sintering Working note Actual Hours at Standard rate Actual Labor costs Standard Labor cost Actual Actual Standard Standard Standard Actual Hours hours X Rate Hours X Rate Rate $23.50 $23.00 $23.00 1,300 1,300 710 $29,900 Standard hours at std rate Actual labor hours at actual rate $16,330 $30,550 Actual labor hours at std rate Direct Labor Rate Direct Labor -$650 -$13,570 Variance Efficiency Variance Unfavourable Unfavourable -$14,220 Unfavourable Total Direct Labor Cost variance Finishing Working note Actual Labor costs Actual Hours at Standard rate Standard Labor cost Standard Standard Standard Actual Actual Actual Hours hours X Rate Hours X Rate X Rate $20.00 $59,000 Standard hours at std rate $22.00 $20.00 2,950 2,950 3,000 Actual labor hours at acttal rate $64,900 Actual labor hours at std rate $60,000 Direct Labor Rate Direct Labor Variance -$5,900 $1,000 Efficiency Variance Favourable Unfavourable Total Direct Labor Cost variance -$4,900 Unfavourable