Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass throug
ID: 2513296 • Letter: M
Question
Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations Sintering and Finishing. Each of the products uses two raw materials, X442 and Y661. The company uses a standard cost system, with the following standards for each product (on a per unit basis): Raw Material X442 Standard Labor Time Y661 Alpha6 Zeta7 Sintering Finishing 3.0 kilos 2.5 liters 0.30 hours 1.20 hours 4.0 kilos 4.5 liters 0.30 hours 0.70 hours Information relating to materials purchased and materials used in production during May follows: MaterialPurchases 15,600 kilos 16,600 liters Cost $49,920 $24,900 standard Price 3.00 per kilo $1.60 per liter Used in Production 10,100 kilos 14,600 liters Y661 The following additional information is available: a. The company recognizes price variances when materials are purchased b. The standard labor rate is $22.00 per hour in Sintering and $21.00 per hour in Fimishing. c. During May, 1,400 direct labor-hours were worked in Sintering at a total labor $33,740, and 3,010 direct labor-hours were worked in Finishing at a total labor cost of $69,230. d. Production during May was 2,200 Alpha6s and 1,000 Zetas. Requied: 1. Complete the standard cost card for each product, showing the standard cost of direct materials and direct labor. (Round your answers to 2 decimal places.) Standard Standard Standa kilos Direct materials-X442 Direct materials-Y661 Direct labor-Sintering Direct labor-Finishing Total per kilo per liter per hour hours hours per hour $ 0.00 Zetat: Dirgct materials-X442 per kão esc 20 F5 F6 F7Explanation / Answer
1) Standard Card for Each Product (Amounts in $)
2) Direct Material Variances-Material X442:
Actual Price = $49,920/15,600 kilos = $3.20 per kilo
Material Price Variance = (Std. Price - Actual Price)*Actual Material purchased
= ($3.00 - $3.20)*15,600 = ($3,120) Unfavorable
Std. Qty for actual production = (2,200 Alpha6*3.0 kilos)+(1,000 Zeta7*4.0 kilos)
= 6,600+4,000 = 10,600 kilos
Material Quantity Variance = (Std. Qty for actual production - Actual Qty used)*Std Price
= (10,600-10,100)*$3.00 = $1,500 Favorable
Direct Material Variances-Material Y661:
Actual Price = $24,900/16,600 liters = $1.50 per liter
Material Price Variance = (Std. Price - Actual Price)*Actual Material purchased
= ($1.60 - $1.50)*16,600 = $1,660 Favorable
Std. Qty for actual production = (2,200 Alpha6*2.5 liters)+(1,000 Zeta7*4.5 liters)
= 5,500+4,500 = 10,000 liters
Material Quantity Variance = (Std. Qty for actual production - Actual Qty used)*Std Price
= (10,000-14,600)*$1.60 = ($7,360) Unfavorable
3) Direct Labor Variances-Sintering:
Actual rate = $33,740/1,400 hrs = $24.10
Labor rate variance = (Std Rate - Actual Rate)*Actual Hours
= ($22.00 - $24.10)*1,400 hrs = ($2,940) Unfavorable
Std Hrs for Actual Production = [(2,200 Alpha6*0.30 hrs)+(1,000 Zeta7*0.30 hrs)]
= 660 hrs+300 hrs = 960 hrs
Labor Efficiency Variance = (Std Hrs - Actual Hrs)*Std Rate
(960 hrs - 1,400 hrs)*$22 = ($9,680) Unfavorable
Direct Labor Variances-Finishing:
Actual rate = $69,230/3,010 hrs = $23
Labor rate variance = (Std Rate - Actual Rate)*Actual Hours
= ($21.00 - $23.00)*3,010 hrs = ($6,020) Unfavorable
Std Hrs for Actual Production = [(2,200 Alpha6*1.20 hrs)+(1,000 Zeta7*0.70 hrs)]
= 2,640 hrs+700 hrs = 3,340 hrs
Labor Efficiency Variance = (Std Hrs - Actual Hrs)*Std Rate
(3,340 hrs - 3,010 hrs)*$21 = $6,930 Favorable
Particulars Standard Quantity or Hours (A) Standard Price or Rate (B) Standard Cost (A*B) Alpha6: Direct Materials-X442 3.0 kilos $3.00 per kilo 9.00 Direct Materials-Y661 2.5 liters $1.60 per liter 4.00 Direct Labor-Sintering 0.30 hours $22.00 per hour 6.60 Direct Labor-Finishing 1.20 hours $21.00 per hour 25.20 Total 44.80 Zeta7: Direct Materials-X442 4.00 kilos $3.00 per kilo 12.00 Direct Materials-Y661 4.50 liters $1.60 per liter 7.20 Direct Labor-Sintering 0.30 hours $22.00 per hour 6.60 Direct Labor-Finishing 0.70 hours $21.00 per hour 14.70 Total 40.50Related Questions
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