Direct Materials and Direct Labor Variance Analysis
Shasta Fixture Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 70 employees. Each employee presently provides 38 hours of labor per week. Information about a production week is as follows:
Standard wage per hr. | $20.00 |
Standard labor time per faucet | 30 min. |
Standard number of lbs. of brass | 2.5 lbs. |
Standard price per lb. of brass | $1.80 |
Actual price per lb. of brass | $1.95 |
Actual lbs. of brass used during the week | 13,000 lbs. |
Number of faucets produced during the week | 5,000 |
Actual wage per hr. | $18.75 |
Actual hrs. for the week (70 employees × 38 hours) | 2,660 |
a. Determine the standard cost per unit for direct materials and direct labor. Round the cost per unit to two decimal places.
Direct materials standard cost per unit | $ |
Direct labor standard cost per unit | $ |
Total standard cost per unit | $ |
b. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
c. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
Solution a:
Direct materials standard cost per unit | $4.50 |
Direct labor standard cost per unit | $10.00 |
Total standard cost per unit | $14.50 |
Solution b:
Direct Material Cost Variance | ||||||||||||
Actual Cost | Standard cost for actual quantity | Standard Cost | ||||||||||
AQ * | AP = | AQ * | SP = | SQ * | SP = | |||||||
13000 | $1.95 | $25,350.00 | 13000 | $1.80 | $23,400.00 | 12500 | $1.80 | $22,500.00 | ||||
$1,950.00 | U | $900.00 | U | |||||||||
Direct Material Price Variance | Direct Material Qty variance | |||||||||||
Direct material price variance | $1,950.00 | U | ||||||||||
Direct material quantity variance | $900.00 | U | ||||||||||
Direct material cost variance | $2,850.00 | U |
Solution c:
Direct Labor Cost Variance | ||||||||||||
Actual Cost | Standard cost for actual quantity | Standard Cost | ||||||||||
AH * | AR = | AH * | SR = | SH * | SR = | |||||||
2660 | $18.75 | $49,875.00 | 2660 | $20.00 | $53,200.00 | 2500 | $20.00 | $50,000.00 | ||||
$3,325.00 | F | $3,200.00 | U | |||||||||
Direct Labor rate Variance | Direct Labor Efficiency Variance | |||||||||||
Direct Labor Rate variance | $3,325.00 | F | ||||||||||
Direct Labor Efficiency variance | $3,200.00 | U | ||||||||||
Direct labor cost variance | $125.00 | F |
Direct Materials and Direct Labor Variance Analysis Shasta Fixture Company manufactures faucets in a small manufacturing...
Direct Materials and Direct Labor Variance Analysis Shasta Fixture Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 40 employees. Each employee presently provides 36 hours of labor per week. Information about a production week is as follows: Standard wage per hour $16.20 Standard labor time per unit 20 min. Standard number of lbs. of brass 2.1 lbs. Standard price per lb. of brass $12.00 Actual price per lb. of brass $12.25 Actual...
Direct Materials and Direct Labor Variance Analysis Shasta Fixture Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 40 employees. Each employee presently provides 36 hours of labor per week. Information about a production week is as follows: Standard wage per hour $12.60 Standard labor time per unit 20 min. Standard number of lbs. of brass 2.1 lbs. Standard price per lb. of brass $10.75 Actual price per lb. of brass $11.00 Actual...
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