Sharp Company manufactures a product for which the following standards have been
ID: 2452165 • Letter: S
Question
Sharp Company manufactures a product for which the following standards have been set:
Standard Quantity
or Hours
Standard Price
or Rate
Standard
Cost
Direct materials
3 feet
$5.00per foot
$
15
Direct labor
?hours
? per hour
?
During March, the company purchased direct materials at a cost of $58,250, all of which were used in the production of 3,330 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 $39,350. The following variances have been computed for the month:
Materials quantity variance
$
2,550
U
Labor spending variance
$
610
F
Labor efficiency variance
$
760
F
Required:
1.
For direct materials:
a.
Compute the actual cost per foot for materials for March. (Round your answer to 2 decimal places.)
Actual cost $ __________ per foot
b.
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))
Price Variance _____________ Spending Variance _____________
2.
For direct labor:
a.
Compute the standard direct labor rate per hour. (Do not round intermediate calculations.)
Standard Direct Labor Rate per hour $______________
b.
Compute the standard hours allowed for the month’s production.
Standard hours _________
c.
Compute the standard hours allowed per unit of product. (Round your answer to 1 decimal place.)
Standard hours ______ hours per unit
Sharp Company manufactures a product for which the following standards have been set:
Explanation / Answer
Ans 1 Material Qty Variance (Actual Qty-Std Qty)*Std Rate 2550 Difference in qty Qty Variance /Std price of per unit of DM 2550/5 510 Actual Qty Std Qty+ Unfavaroble Qty Variance 3330*3+510 10,500.00 Tota Cost of actual Material 58,250.00 Actual cost per Material Tota Cost of actual Material/Actual Qty 5.55 Material Price Variance Actual Qty*(AR-SR) 10500*(5.55-5) UF 5750 Spending Variance Price Variance + Qunatity variance UF 8300 Ans 2 Actual Rate per LH Direct Labor/Labor Hours 39350/4900 8.03 Labor spending variance (Actual Rate-Std Rate)*Actual Hours F 610 Std Rate Actual Hours-(Unfavorable Spending variance/Actual Hours) 7.91 Labor efficiency variance (Actual Hours-Std Hours)*Std Rate F 760 Difference in Hours Efficiency Variance /Std labor rate per hour 96 Std Hours Actual hours+Difference in hours 4,996 Std Hour required for Product Std Hours/Actual Output 1.50
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