The following data for the Alma Company pertain to the production of 1,000 urns

Question

The following data for the Alma Company pertain to the production of 1,000 urns during August.

Direct Materials (all materials purchased were used):

Standard cost: $6.00 per pound of urn.

Total actual cost: $5,600.

Standard cost allowed for units produced was $6,000.

Materials efficiency variance was $120 unfavorable.

Direct Manufacturing Labor:

Standard cost is 2 urns per hour at $24.00 per hour.

Actual cost per hour was $24.50.

Labor efficiency variance was $336 favorable.

Required:

a. What is standard direct material amount per urn?

b. What is the direct material price variance?

c. What is the total actual cost of direct manufacturing labor?

d. What is the labor price variance for direct manufacturing labor?

I KNOW all the answer of this problem, but I need a clear explaination do we have any equations to solve each problems, If YES, what is it? Is Standard cost the same with Flesxible budget??

Explanation / Answer

SR 6 AR 5.49 SQ 1000 AQ 1020 a standard material cost =(1000*6)=6000 material efficiency variance = SR*(SQ-AQ) ie -120 = 6(1000-AQ) AQ = 1020 b material price variance = AQ(SR-AR) ie= 1020(6-5.49) ie= 520 (F) c actual cost of labor =1986*24.5= 48657 SR 24 AR 24.5 SH 2000 AH 1986 labor efficiency variance = SR*(SH-AH) ie 336 = 24(2000-AH) AH= 1986 d labor price variance = AH(SR-AR) ie= 1986(24-24.5) ie= 993(A)

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