Thornton Manufacturing Company produces a single product. The following data app

Question

Thornton Manufacturing Company produces a single product. The following data apply to the standard cost of materials and labor associated with making the product:

During the year, the company made 2,100 units of product. At the end of the year, the following variances had been calculated.

a) Determine the actual amount of materials used.

b) Determine the actual price paid per pound for materials. (Round your answer to 2 decimal places.)

c) Determine the actual labor hours used.

d) Determine the actual labor price per hour. (Round your answer to 2 decimal places.)

Materials quantity per unit 1 pound Materials price $ 6.50 per pound Labor quantity per unit 2 hours Labor price $ 10.50 per hour

Explanation / Answer

a) Materials usage variance = (Standard quantity of material - Actual material used) x Standard rate
$1,495 = {(2,100 x 1) -  Actual material used} x $6.50
Actual material used = 1,870

b) Materials price variance = (Standard price per pound - Actual price per pound) x Actual material used
- $187 = ($6.50 - Actual price per pound) x 1,870
  Actual price per pound = $6.6 per pound

c) Labor usage variance = (Standard labor hours - Actual labor hours used) x Standard rate
- $3,675 = {(2,100 x 2) - Actual labor hours used) x $10.50
  Actual labor hours used = 4,550

d)   Labor price variance = (Standard labor price per hours - Actual labor price per hours) x Actual labor hours used
$3,640 = ($10.50 - Actual labor price per hours) x 4,550
Actual labor price per hours = $9.70

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