Starling Manufacturing has developed the following standards for one of its prod
ID: 2381678 • Letter: S
Question
Starling Manufacturing has developed the following standards for one of its products.
STANDARD VARIABLE COST CARD
One Unit of Product
Materials: 5 yards x $6 per yard
$30.00
Direct labor: 2 hours x $8 per hour
16.00
Variable manufacturing overhead: 2 hours x $5 per hour
10.00
Total standard variable cost per unit
$56.00
The company records materials price variances at the time of purchase.
The following activity occurred during the month of December:
Materials purchased:
5,200 yards costing $29,900
Materials used:
4,750 yards
Units produced:
1,000 units
Direct labor:
2,100 hours costing $17,850
Can you calculate the direct-material price and usage variances and the direct-labor rate and efficiency variances? Thanks!
STANDARD VARIABLE COST CARD
One Unit of Product
Materials: 5 yards x $6 per yard
$30.00
Direct labor: 2 hours x $8 per hour
16.00
Variable manufacturing overhead: 2 hours x $5 per hour
10.00
Total standard variable cost per unit
$56.00
The company records materials price variances at the time of purchase.
The following activity occurred during the month of December:
Materials purchased:
5,200 yards costing $29,900
Materials used:
4,750 yards
Units produced:
1,000 units
Direct labor:
2,100 hours costing $17,850
Explanation / Answer
price/rate variance= (actual price-standard price)*actual quantity
quantity/efficiency variance = (actual quantity - standard quantity)*standard price
direct material price var = (5.75-6)*5200 = -1300 F (here 5.75 = 29900/5200)
direct material quantity var = 4750- 1000*5)*6 = -1500 F
direct labor rate var = (8.5 - 8)*2100 = 1050 U (here 8.5 = 17850/2100)
direct labor efficiency var = (2100 - 2*1000)*5 = 500 U
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