Sharp Company manufactures a product for which the following standards have been
ID: 2466759 • 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 $44,100, all of which were used in the production of 2,350 units of product. In addition, 4,800 hours of direct labor time were worked on the product during the month. The cost of this labor time was $40,800. The following variances have been computed for the month:
Compute the actual cost per foot for materials for March.
Compute the price variance and the spending variance.
Compute the standard direct labor rate per hour.
Compute the standard hours allowed for the month’s production.
Compute the standard hours allowed per unit of product.
Sharp Company manufactures a product for which the following standards have been set:
Explanation / Answer
Material:
SQSP AQSP AQAP
=7,050 x 5 =7,350 x 5 =7,350 x 6
=$35,250 =$36,750 =$44,100
SP= Standard Price= $5
SQ= Standard Quantity for actual production =3 x 2,350= 7,050
AQ= Actual Quantity Raw Material used=?
AP=Actual Price=?
Material Quantity Variance= SQSP- AQSP=- $1,500 U
= $35,250- AQSP= -1,500
AQSP= 35,250 + 1500
AQSP= $36,750
AQ x 5=$36,750
AQ= 36,750/5= 7,350 feet raw material
AQAP=Actual Raw Material Cost= $44,100
7,350 x AP=$44,100
AP=44,100/7,350
AP=$6
1 a) Compute the actual cost per foot for materials for March.=$6
b) Material Price Variance=AQSP-AQAP=$36,750-$44,100=$7,350 U
Material spending Variance =SQSP-AQAP=35,250-44,100=$8,850 U
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Labor:
SRSH SRAH ARAH
=4,700 x 8 =4,800 x 5 =4,800 x 8.5
=$37,600 =$38,400 =$40,800
SR= Standard Rate per Labor hr=?
SH= Standard hrs required for actual production =?
AH= Actual hrs worked Raw =4,800 hrs
AR=Actual Rate= $44,100/$4,800=
Labor Spending Variance= SRSH- ARAH=- $3,200 U
= SRSH- 40,800= -3,200
SRSH=40,800-3,200
SRSH=$37,600
Labor Efficiency Variance= SRSH- SRAH=-$800 U
37,600-SRAH= -800
SRAH =37,600 +800
SRAH=$38,400
SR x 4,800=$38,400
SR=$38,400/4,800
SR=$8
SH=36,700/8=4,700 hrs
2)a) Labor Rate Variance=SRAH-ARAH=$38,400-$40,800=$2,400 U
b) standard hours allowed for the month’s production.=4,700 hrs
c)Standard hrs allowed per unit=4,700/2,350=2 hrs
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