Sharp Company manufactu uct for which the following standards have been set Stan

Question

Sharp Company manufactu uct for which the following standards have been set Standard Price S or Rate cost ss per foot 15 t materials rect labor per hour 04 1145 During March, the company purchased direct materials at a cost of $49,170, all of which were used in the production of product. In addition, 4500 direct labor-hours were worked on the product during the m The following variances have been computed for the month 2,750 units of onth. The cost of this labor time was $36,000 Materials quantity variance Labor spending variance Labor efficiency variance 5 3,45e u 5 3,000 U eBook 750 Required: 1. For direct materials a Compute the actual cost per foot of materials for March References b. Compute the price variance and the spending variance 2 For direct labor a. Compute the standard direct labor rate per hour b. Compute the standard hours allowed for the month's production c. Compute the standard hours allowed per unit of product Complete this question by entering your answers in the tabs below Req 1A Req 1BReq 2 For direct materials, compute the price variance and the spending variance. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance) Input all amounts as positive values.) Price varlance Req 1A Req 2

Explanation / Answer

Solution 1:

Standard quantity of material for actual production = 2750 * 3 = 8250 foot

Standard price of material = $5

Material quantity variance = $3,450 U

(SQ - AQ) * SP = -$3,450

(8250 - AQ) * $5 = -$3,450

AQ = 8940 foot

Actual price of material = $49,170 / 8940 = $5.50 per foot

Material price variance = (SP - AP) * AQ = ($5 - $5.50) * 8940 = $4,470 U

Material spending variance = Material price variance + Material quantity variance = $4,470 U + $3,450 U = $7,920 U

Solution 2:

Actual hours of direct labor = 4500

Actual rate of direct labor = $36,000 / 4500 = $8 per hour

Labor spending variance = $3,000 U

Labor efficiency variance = $750 U

Labor rate variance = Labor spending variance - Labor efficiency variance = $3,000 U - $750 U = $2,250 U

(SR - AR)* AH = -$2,250

(SR - $8)* 4500 = -$2,250

Standard rate of direct labor = $7.50 per hour

(SH - AH) * SR = -$750

(SH - 4500) * $7.50 = -$750

Standard hours = 4400 hours

Standard direct labor rate per hour = $7.50

Standard hours allowed for month production = 4400 hours

Standard hours allowed per unit of product = 4400 / 2750 = 1.60 hours per unit

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