Sharp Company manufactures a product for which the following standards have been
ID: 2445038 • Letter: S
Question
Sharp Company manufactures a product for which the following standards have been set:
During March, the company purchased direct materials at a cost of $58,050, all of which were used in the production of 3,320 units of product. In addition, 4,900 hours of direct labor time were worked on the product during the month. The cost of this labor time was $39,150. The following variances have been computed for the month:
Compute the actual cost per foot for materials for March. (Round your answer to 2 decimal places.)
Compute the price variance and the spending variance. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance))
Compute the standard direct labor rate per hour. (Do not round intermediate calculations.)
Compute the standard hours allowed for the month’s production.
Compute the standard hours allowed per unit of product. (Round your answer to 1 decimal place.)
Sharp Company manufactures a product for which the following standards have been set:
Explanation / Answer
Following is the questions as same as above . Only figures are changing. Pls Do according to the following
During June, the company purchased direct materials at a cost of $49,770, all of which were used in the production of 3,000 units of product. There were no beginning inventories of raw materials. In addition, 5,400 hours of direct labor time were worked on the product during the month. The cost of this labor time was $38,340. The following variances have been computed for the month: Materials quantity variance $2,400 U Total labor variance $90 U Labor efficiency variance $2,250 U Required: 1. For direct materials: a. Compute the actual cost per foot for materials for June. b. Compute the materials price variance and a total variance for materials. 2. For direct labor: a. Compute the standard direct labor rate per hour. b. Compute the standard hours allowed for the month’s production. c. Compute the standard hours allowed per unit of product. (Hint: In completing the problem, it may be helpful to move from known to unknown data either by using the columnar format shown in Exhibits 8–4 and 8–6 or by using the variance formulas.)"
2. a. Labor rate variance = AH (AR – SR)
5,400 hours ($7.10 per hour* – SR) = $2,160 F**
$38,340 – 5,400 hours × SR = -$2,160***
5,400 hours × SR = $40,500
SR = $7.50 per hour
*
$38,340 ÷ 5,400 hours
**
Total labor variance................................................................
$ 90
U
Labor efficiency variance.......................................................
2,250
U
Labor rate variance................................................................
$2,160
F
***
When used with the formula, unfavorable variances are positive and favorable variances are negative.
b. Labor efficiency variance = SR (AH – SH)
$7.50 per hour (5,400 hours – SH) = $2,250 U
$40,500 – $7.50 per hour × SH = $2,250*
$7.50 per hour × SH = $38,250
SH = 5,100 hours
*
When used with the formula, unfavorable variances are positive and favorable variances are negative.
Alternative approach to parts (a) and (b):
Actual Hours of Input, at the Actual Rate
Actual Hours of Input, at the Standard
Rate
Standard Hours Allowed for Actual Output, at the Standard Rate
(AH × AR)
(AH × SR)
(SH × SR)
$38,340*
5,400 hours*
× $7.50 per hour
5,100 hours
× $7.50 per hour
= $40,500
= $38,250
Rate Variance,
$2,160 F
Efficiency Variance,
$2,250 U*
Total Variance, $90 U*
*Given.
c. The standard hours allowed per unit of product would be:
5,100 hours ÷ 3,000 units = 1.70 hours per unit
*
$38,340 ÷ 5,400 hours
**
Total labor variance................................................................
$ 90
U
Labor efficiency variance.......................................................
2,250
U
Labor rate variance................................................................
$2,160
F
***
When used with the formula, unfavorable variances are positive and favorable variances are negative.
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