Direct Materials and Direct Labor Variance Analysis Best Faucet Company manufact

Question

Direct Materials and Direct Labor Variance Analysis Best Faucet Company manufactures faucets in a small manufacturing facility. The faucets are made from zinc. Manufacturing has 70 employees. Each employee presently provides 36 hours of labor per week. Information about a production week is as follows: Standard wage per hour $12.6 Standard labor time per faucet 20 min. Standard number of lbs. of zinc 1.7 lbs. Standard price per lb. of zinc $10.5 Actual price per lb. of zinc $10.75 Actual lbs. of zinc used during the week 14,700 lbs. Number of faucets produced during the week 8,400 Actual wage per hour $13 Actual hours per week 2,520 hrs. 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 standard cost per faucet $ 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. Price variance $ Quantity variance $ Total direct materials cost variance $ 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. Rate variance $ Time variance $ Total direct labor cost variance $

Explanation / Answer

No of Employees 70 Labour hrs per employee per week 36 standard wage per hour $12.6 standard labor time per faucet 20 minutes standard number of pounds of zinc 1.7 lbs. standard price per pound of zinc $10.50 actual price per pound of zinc $10.75 actual pounds of zinc used during the week 14,700 lbs. number of faucets produced during the week 8,400 actual wage per hour $13 actual hours per week 2,520 hours a. Determine the standard cost per faucet for direct materials and direct labor. Standard cost of direct material per faucet = Standard pounds of zinc per unit*StandardPrice of zinc =1.7lbs*10.50 $         17.85 Standard cost of direct labour per faucet = Standard labour hrs per unit*Standard Cost per hr of labour = (20min/60min) hrs*12.6 = 0.33 hrs*12.6 $            4.20 b. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance Direct Material Price Variance: ( Actual Price - Standard Price )*? Actual Quantity = ($10.75 - $10.50)*14700 lbs $   3,675.00 (unfavourable) Direct Material Quantity Variance: = (Actual Quantity - Standard Quantity) x Standard cost per pound =(14700 lbs - 8400 units*1.7 lbs-)*10.50 $   4,410.00 Unfavouable Total Direct Material Cost Variance = Direct Material Price Variance+ Direct Material Quantity Variance = $3675+$4410 $   8,085.00 Unfavouable c Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Direct Labour Price Variance= (Actual Rate -Standad Rate )* Actual Hrs = ($13- $12.60)*2520hrs = 1008 Unfavourable Direct Labour Quantity Variance= (actual hrs worked - Std hrs for actual output)standard rate (2520 hrs - 0.3333 hrs*8400 units)12.60$ = (2520 hrs - 2800 hrs)12.60$ -3528 Total Direct Labour Cost Variance = Direct Labour Price Variance+ Direct Labour Quantity Variance = $ 1008-3525 -2517

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