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:

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

Standard Quantity Standard Price Standaro or Hours 3 feet ? hours Cost $15 or Rate Direct materials Direct labor $5 per foot ? per hour During March, the company purchased direct materials at a cost of $52,965, all of which were used in the production of 2,920 units of product. In addition, 4,500 hours of direct labor time were worked on the product during the month. The cost of this labor time was $31,500. The following variances have been computed for the month: Materials quantity variance Labor spending variance Labor efficiency variance $4,350 U $3,030 U $ 780 U 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

Explanation / Answer

Material:

SQSP AQSP                                                                     AQAP

8,760 X 5 9,630 x 5                                                   9,630 x 5.5

=$43,800 =$48,150                                                              =$52,965             

SP = Standard Material Cost per Unit= $5

SQ= Standard Quantity for Actual Production= 3 x 2,920=$8,760

AQ= Actual Quantity used=

AP= Actual Price per Unit=?

AQAP= Actual Cost of Material =$52,965

Material Quantity variance= SQSP-AQSP=-$4,350 U

                                                 =43,800- AQSP= - 4,350

                                                 AQSP= 43,800+4,350

                                                  AQSP=$48,150

                                                   AQ= $48,150/5=9,630 units

                AP = AQAP/AQ=$52,965/9,630=$5.50

Labor:

SRSH SRAH                                                                      ARAH

4,380 X 6.5 4,500 x 6.5                                                               4,500 x 7

=$28,470 =$29,250                                                                  =$31,500             

               

SR = Standard Rate per Labor hr=?

SH= Standard hrs require for Actual Production= ?

ARAH= Actual Cost of Labor =$31,500

AH=Actual hours worked=4,500 hrs

AR= Actual Rate per Labor hr=ARAH/AH=$31,500/4,500=$7

Labor Spending variance= SRSH-ARAH=- 3,030 U

                                                 =SRSH= 31,500-3,030

                                                 SRSH= $28,470

                                                  

Labor Efficiency variance= SRSH-SRAH=- 780 U

                                                 =28,470- SRAH = - 780

                                                 SRAH=28,470 + 780

                                                SRAH=$29,250

SR= SRAH/ AH=$29,250/4,500=$6.50

SH=SRSH/SR=$28,470/6.5=4,380 hrs

1.

a) Actual Cost AP=$5.5

b) Material Price Variance= AQSP-AQAP

                                               =$48,150-$52,965=$4,815 U

       Material Spending Variance= SQSP-AQAP

                                                          =$43,800-$52,965=$9,165 U

2)

Standard direct labor rate per hr=AR=$7

Standard hrs allowed =SH=4,380 hrs

Standard hr per unit= =4,380/2,920=1.5 hr

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