Sharp Company manufactures a product for which the following standards have been

Question

Sharp Company manufactures a product for which the following standards have been set: Standard Price Standard Cost $15 Standard Quantity Direct materials Direct labor or Hours 3feet hours or Rate $5 per foot ? per hour During March, the company purchased direct materials at a cost of $60,050, all of which were used in the production of 3,420 units of product. In addition, 4,900 hours of direct labor time were worked on the product during the month. The cost of this labor time was $41,150. The following variances have been computed for the month: Materials quantity variance Labor spending variance Labor efficiency variance $1,200 U S 110 U $1,840F Required 1. For direct materials: a. Compute the actual cost per foot for materials for March. (Round your answer to 2 decimal places. cost per foot b. Compute the price variance and the spending variance. (Do not round intermediate calculations. Indicate the offect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effoct (i.e. zero varianco)) Price variance Spending variance

Explanation / Answer

As per policy only first four parts will be answered

1- a

Materials quantity variance = SP * (AQ-SQ)

1200 = 5*(AQ - (3420*3))

1200=5AQ - 51300

52500 = 5AQ

AQ = 10500

1-B

Materials price variance = AQ * (AP-SP) = 10500*((60050/10500)-5) = 7550 U

Spending variance = 1200 U (given)

2-a

Labor rate variance = AH *(AR - SR)

110 = 4900*((41150/4900)-SR)

110=41150 - 4900SR

4900 SR =41040

Standard direct labor hours per rate per hour = 8.38

2-b

Labor efficiency variance = SR * (AH - SH)

-1840=8.38*(4900-SH)

-1840=41062 - 8.38SH

8.38 SH = 42902

SH = 5120 hours

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