Sharp Company manufactures a product for which the following standards have been

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 $45,180, all of which were used in the production of 2,290 units of product. In addition, 4,700 hours of direct labor time were worked on the product during the month. The cost of this labor time was $32,900. 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

1) For Direct Material

a) Actual Cost per foot

Material Quantity Variance = Standard price X ( Standard quantity - Actual Quantity)

- 3,300 = 5 X ( ( 2,290 X 3 ) - Actual Quantity

- 3,300 = 5 X ( 6,870 - Actual Quantity)

- 3,300 / 5 = 6,870 - Actual Quantity

- 660 = 6,870 - Actual Quantity

Actaual Quantity = 6870 + 660 = 7,530 foot

Actual Cost per foot = Total Cost / Actual Quantity = 45,180 / 7,530 = $ 6 per foot

b) Material Price variance and spending variane

= Actual quanity X ( Standard price - Actual Price )

= 7, 530 X ( 5 - 6 )

= 7,530 U

2) For Direct Labor

a) Standard Direct Labor rate per hour

Labor spending Varaince = Actual Hours X ( Standard Rate - Actual Rate )

- 3,130 = 4,700 X ( Standard Rate - ( 32,900 / 4,700 ) )

- 3,130 / 4,700 = Standard Rate - 7

- 0.67 + 7 = Standard rate

Standard Rate = $ 6.33 per hour

b) Standard hours

Labor effeciancy variance = Standard price ( Standard Hours - Actual Hours )

- 780 = 6.33 X ( Standard Hours - 4,700)

-780 / 6.33 = Standard Hours - 4,700

- 123 = Standard Hours - 4,700

Standard hours = 4,577 hours

c) Standard Hours per unit

= Standard Hours used / Units produced

= 4,577 / 2,290

= 1.9 per unit

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