The Geurtz Company uses standard costing. The company makes and sells a single p

Question

The Geurtz Company uses standard costing. The company makes and sells a single product called a Roff. The following data are for the month of August Actual cost of direct materlal purchased and used: $139,545 Material price varlance: $6,645 unfavorable Total materials varlance: $31,245 unfavorable Standard cost per pound of materlal: $6 Standard cost per direct labor-hour: $6 .Actual direct labor-hours: 17,550 hours Labor efficiency varlance: $3,000 favorable Standard number of direct labor-hours per unit of Roff. 5 hours Total labor varlance: $7,530 unfavorable The total number of units of Roff produced durlng August was: O 3,610 O 3,010 O 3,510 O 3,310

Explanation / Answer

Question 1

Answer is option A credit 3610

Labor efficiency variance = (AH * SR) - (SH * SR)

= (17550 hours * $6 per hour) - (5 hours per unit * Actual units produced * $6 per hour) = - $3,000

$105300 - ($30 per unit * Actual units produced) = -$3,000

$30 per unit * Actual units produced = $108300

Actual units produced = $108300 ÷ $ 30 per unit = 3,610 units

Question 2

Answer is option D 4 pounds

Total materials variance = Actual materials cost - Standard materials cost

$31650 = $122850 - Standard materials cost

Standard materials cost = $91200

Standard materials cost = Standard cost per pound * Standard pounds per unit * Actual units produced

$91200 = $6 per pound * Standard pounds per unit * 3,610 units

Standard pounds per unit = $91200 ÷ ($6 per pound * 3,610 units) = 4.21 = 4 pounds per unit

Question 3

Answer is option D $5.80

Total labor variance = Labor rate variance + Labor efficiency variance

$4240 U = Labor rate variance + $4000 F

Labor rate variance = $8240 U

Labor rate variance = (AH * AR) - (AH * SR) = AH (AR - SR)

$8240 = 10300 hours (AR - $5 per hour)

$8240 = 10300 hours * AR - $51500

10300 hours * AR = $59740

AR = $59740 ÷ 10300 hours = $5.80 per hour

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