Exercise 11-9 You have been given the following information about the production
ID: 2527438 • Letter: E
Question
Exercise 11-9 You have been given the following information about the production of Usher Co., and are asked to provide the plant manager with information for a meeting with the vice president of operations. Direct materials (9 pounds at $3 per pound) Direct labor (0.70 hours at $7) Variable overhead (0.70 hours at $5 per hour) Fixed overhead (0.70 hours at $7 per hour) Standard Cost Card $27.00 4.90 3.50 4.90 $40.30 The following is a variance report for the most recent period of operations. Variances Costs Total Standard Cost PriceQuantity 406,000 $7,070 F $9,300 U 73,681 5,500 U 8,000 U Direct materials Direct laborExplanation / Answer
(a)Units were produced during the year
Number of units produced = Total standard cost ÷ Standard cost per unit
Number of units = $4,06,000 / $27
= 15,037 Units
(b)Pounds of raw material were purchased and used during the year
AQ = [(SQ X SP) + Quantity variance] / SP
AQ = ($4,06,000 + $9300) / $3
AQ = $4,15,300 / $3
AQ = 1,38,433 Units
(c)What was the actual cost per pound of raw materials
AP = [(AQ X SP) - Price variance] / AQ
AP = [(138433 X $3) – $7070] / 138433
AP = $408229 / 138433 lb
AP = $2.95/lb
(d) How many actual direct labor hours were worked during the period?
AH = [(SH X SR) + Quantity variance] ÷ SR
AH = ($73681 + $8000) ÷ $7/hr
AH= 11,669 hours
(e) What was the actual rate paid per direct labor hour?
AR = [(AH X SR) + Price variance] ÷ AH
AR = [(11669 x $7) + $5500] /11669
AR = $87183 ÷ 11669 hour
AR = $7.47 per hour
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