8-A3 Barber Brass manufactures trumpets, trombones, tubas, and other brass instr

Question

8-A3

Barber Brass manufactures trumpets, trombones, tubas, and other brass instruments. The following standards were developed for a line of trumpets.

                 Standard Inputs Expected For Each    Standard Price per

                          Unit of Output Achieved                    Unit of Input

Direct materials               5 pounds                         $10 per pound
Direct labor                       10 hours                        $25 per hour

During April, Barber scheduled 550 trumpets for production. However, the company produced only 525.
Barber purchased and used 3,100 pounds of direct materials at a unit price of $8.50 per pound. It used 5,500 hours of direct labor at an actual rate of $26.00 per hour.

1. Compute the standard cost per trumpet for direct materials and direct labor.

2. Compute the price variances and quantity variances for direct materials and direct labor.

3. Based on there sketchy data, what clues for investigation are provided by the variances?

Explanation / Answer

Hi,

Please find the answer as follows:

Part 1:

Standard cost per trumpet for direct materials = 5*10 = $50 per trumpet

Standard cost per trumpet for direct labor = 10*25 = $250 per trumpet

Part 2:

Direct Material Price Variance = Actual Quantity *(Actual Rate - Standard Rate) = 3100*(8.5 - 10) = 4650 (F)

Direct Material Quantity Variance = Standard Rate*(Actual Quantity - Standard Quantity) = 10*(3100 - 525*5) = 4740 (U)

Labor Rate Variance = Actual Hours *(Actual Rate - Standard Rate) = 5500(26 - 25) = 5500 (U)

Labor Quantity Variance = Standard Rate*(Actual Hours - Standard Hours) = 25*(5500 - 10*525) = 6250 (U)

Part 3

Based on the above calculations it can be concluded thet only the material price variance is appropriate. The company has not been able to control its material usage, has consumed more hours and spent more in labor cost, indicating unfavorable efficieny and cost control measures.

Thanks.

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