Oasis Faucet Company manufactures faucets in a small manufacturing facility. The

Question

Oasis Faucet Company manufactures faucets in a small manufacturing facility. The faucets are made from zinc. Manufacturing has 50 employees. Each employee presently provides 36 hours of labor per week. Information about a production week is as follows:

Required:

a. Determine the standard cost per faucet for direct materials and direct labor. Round the cost per unit to two decimal places. Direct materials standard cost per faucet: Direct labor standard cost per faucet: Total cost per faucet:

b. Determine the price variance, quantity variance, and total direct materials cost variance. Use the minus sign to enter favorable variances as negative numbers. Price variance: Quantity variance: Total direct materials cost variance:

c. Determine the rate variance, time variance, and total direct labor cost variance. Use the minus sign to enter favorable variances as negative numbers. Rate variance: Time variance: Total direct labor cost variance:

Thanks!

Explanation / Answer

(a) Standard cost per unit -DM - 1.8# @ $9.50 = $17.10; DL - .25 hrs @ $14 = $3.50; (b)Price Var - Stnd 9.50 vs Act 9.20 = .30 Fav x 21,900 # = 6,570 Fav Quan Var - Stnd 1.8 vs Act (21,900 / 12,000) 1.825 = .025 Unf x 9.50 = .2375 per unit x 12,000 = 2,850 Unf (or 21,900 vs 21,600 = 300 x 9.50 = 2,850). Total DM Var = 3,720 Fav (c) Rate Var - Stnd 14.00 vs Act 14.50 = .50 Unf x 2,880 = 1,440 Unfav Time Var - Stnd 3,000 hrs vs Act 2,880 = 120 Fav x 14.00 = 1,680 Fav. Total DL Var = 240 Fav. Proof - DM used 21,900 x 9.20 = 201,480 Actual; Stnd = 1.8 x 12,000 x 9.50 = 205,200. Net Fav = 3,720Fav DL - Actual 41,760 vs Stnd 42,000 = 240 Fav L Actual 41,760 vs Std 42,000 = 240 Fav

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