Direct Materials and Direct Labor Variance Analysis Abbeville Fixture Company ma

Question

Direct Materials and Direct Labor Variance Analysis

Abbeville Fixture Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 90 employees. Each employee presently provides 36 hours of labor per week. Information about a production week is as follows:

Required:

a. Determine the standard cost per unit for direct materials and direct labor. Round the cost per unit to two decimal places.

b. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

c. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Standard wage per hr. $15.00 Standard labor time per faucet 40 min. Standard number of lbs. of brass 3 lbs. Standard price per lb. of brass $2.40 Actual price per lb. of brass $2.50 Actual lbs. of brass used during the week 14,350 lbs. Number of faucets produced during the week 4,800 Actual wage per hr. $14.40 Actual hrs. for the week (90 employees × 36 hours) 3,240 hrs.

Explanation / Answer

a Direct materials standard cost per unit(3lbs*2.4) $7.2 Direct labor standard cost per unit($15*40/60) $10 Total standard cost per unit $17.2 b Direct Materials Price Variance($2.4*14350lbs)-(14350lbs*$2.5) $1435 unfavourable Direct Materials Quantity Variance(7.2*4800)-(2.4*14350) -$120 favourable Total Direct Materials Cost Variance $1315 unfavourable c Direct Labor Rate Variance=3240hrs*($15-$14.4) -$1944 favourable Direct Labor Time Variance($10*4800)-($15*3240) $600 unfavourable Total Direct Labor Cost Variance -$1344 favourable

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