B. Lima Company manufactures granite kitchen counter tops. Its standard cost inf
ID: 2408657 • Letter: B
Question
B. Lima Company manufactures granite kitchen counter tops. Its standard cost information for last year is as follows Standard StandardStandard Price Unit Cost $330 140 $75 400 Quantity Direct Materials (granite Direct Labor Variable manufacturing overhead Fixed manufacturing overhead ($200,000 for 500 units) 15 sq. ft. $22/sq.ft. 4.0 hrs $35/hr 1.5 hrs $50/hr The company's actual results were Number of units produced and sold Number of square feet of granite used Cost of granite purchased and used 184,500 585 9,000 Number of labor hours worked Direct labor cost 2,300 $89,700 1. Calculate the company's direct materials spending variance 2. Calculate the company's direct labor spending variance.Explanation / Answer
1. Direct materials spending variance = (Actual quantity purchased x Actual price) - (Actual quantity purchased x Standard price) = $184500 – (9000 x $22) = $184500 – $198000 = $13500 Favorable
2. Direct labor spending variance = (Number of labor hours worked x Actual price) – (Number of labor hours worked x Standard price) = $89700 – (2300 x $35) = $89700 - $80500 = $9200 Unfavorable
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