Question

Extra Credit- Problems (1) - Protected View Saved to this PC View Help Mailings Review OSearch aces uses. Unless you need to edit, it's safer to stay in Protected View. Enable Editing ACG 2071 - Extra Credit Assignment 1. The following information comes from the records of Sanders Co. for the current period. a) Compute the direct materials price and quantity variances, direct labor rate and efficiency variances and state whether the variance is favorable or unfavorable. Actual costs and quantities: Direct materials used Direct labor hours used Direct labor rate per hour 25,000 units were produced during the period 37,000 feet @ $6.20 per foot 50,660 hours $16.50 Standard costs and quantities per unit: Direct materials Direct labor 1.5 ft.@ $6.10 per ft. 2 hours @ $17 per hour

Answer 1

WORKING NOTES: 1									Actual output =		25,000 Units
	Standard Cost Per unit				Standard Cost for Actual Output				Actual Cost
	Standard Qunatity	SP	Standard Cost		Standard Qunatity	SP	Standard Cost		Actual Quantity	AP	Actual Cost
	1.5	$               6.10	$                        9.15		37500	$       6.10	$               2,28,750		37000	$         6.20	$               2,29,400
	Ft				(25,000 X 1.5 Ft)				Ft
SOLUTION : 1
	Direct Material price Variance = (		Standard Price	-	Actual Price	) "X"	Actual Quantity
	Direct Material price Variance = (		$                        6.10	-	$                        6.20	) "X"	37000
	Direct Material price Variance =		$                        0.10	"X"	37000
	Direct Material price Variance =		$                     3,700	Unfavorable
SOLUTION : 2
	Material Quantity Variance = (		Actual Quantity	-	Standard Quantity	) "X"	Standard Cost per unit
	Material Quantity Variance = (		37,000	-	37,500	) "X"	$                        6.10
	Material Quantity Variance =		500	"X"	$                        6.10
	Material Quantity Variance =		$                     3,050	Favourable
WORKING NOTES: 2
									Actual Cost for 25,000 Units
	Standard Cost Per unit				Standard Cost for Actual Production
	Standard Time	Std. Rate	Total Cost		Standard Time	Std. Rate	Total Std. Cost		Actual Time	Act. Rate	Actual Cost
	2	$             17.00	$                           34		50000	$     17.00	$               8,50,000		50660	$      16.50	$               8,35,890
	Hrs	Per Hours			Hrs (25,000 X 2)	Per Hours			Hrs	Per Hours
SOLUTION : 3
	Labour Rate Variance = (Actual Rate - Standard Rate) X Actual Hours
	Labour Rate Variance =                 (		$                     16.50	'-'	$                      17.00	) X	50,660
	Labour Rate Variance =		$                        0.50	X	50,660
	Labour Rate Variance =		25330	(favorable)
SOLUTION : 4
	Labour Efficiency Variance = (Actual Hours - Standard Hours ) X Standard Rate
	Labour Efficiency Variance = (		50,660.00	'-'	50,000.00	) X	$                     17.00
	Labour Efficiency Variance =		$                   660.00	X	$                      17.00
	Labour Efficiency Variance =		11220	(Unfavorable)