Exercise 11-3 Stefani Company has gathered the following information about its p

Question

Exercise 11-3 Stefani Company has gathered the following information about its product Direct materials: Each unit of product contains 3.40 pounds of materials. The average waste and spoilage per unit produced under normal conditions is 0.10 pounds. Materials cost $2 per pound, but Stefani always takes the 5.00% cash discount all of its suppliers offer. Freight costs average $0.45 per pound. Direct labor. Each unit requires 2.80 hours of labor. Setup, cleanup, and downtime average 0.10 hours per unit. The average hourly pay rate of Stefani's employees is $13.10. Payroll taxes and fringe benefits are an additional $3.00 per hour Manufacturing overhead. Overhead is applied at a rate of $5.90 per direct labor hour. Compute Stefani's total standard cost per unit. (Round answer to 2 decimal places, e.g. 1.25.) Total standard cost per unit s

Explanation / Answer

Std Quantity allowed for actual output (350 units @10 pounds): 3500 pounds Std price per pound: $ 2.90 per pound Actual Quantity required: 2100 pounds Actual price per pound (6510/2100): $ 3.10 per pound Total Material variance: Std quantity *Std price - Actual Qty-Actual price 3500*2.90 -2100*3.10 = $ 3640 Fav Material price variance: Actual quantity (Std price-Actual price) 2100 (2.9-3.10) = $ 420 Unfav Material Quantity Variance= Std price (Std quantity-Actual Quantity) 2.90 (3500-2100) = $ 4060 Fav Std Llabour hours allowed for actual output (350*3hrs): 1050 hours Std rate per hour: $ 13 per hour Actual hours used: 1080 hours Actual rate per hour (13932/1080)= $ 12.90 per hour Total Labour cost Variance: Std hours*Std rate-Actual hours*Actual rate 1050*13 - 1080*12.90 = $ 282 Unfav Labour rate variance: Actual hours (Std rate-Actual rate) 1080 (13.00-12.90)= $ 108 Fav Labour efficiency variance: Std rate (Std hours-Actual hours) 13.00 (1050-1080) = $390 unfav

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