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 Quantity Standard Price Standard or Hours 3 feet ? hours Cost $ 15 or Rate Direct materials Direct labor $5 per foot ? per hour During March, the company purchased direct materials at a cost of $53,730, all of which were used in the production of 2,875 units of product. In addition, 4,700 hours of direct labor time were worked on the product during the month. The cost of this labor time was $37,600. The following variances have been computed for the month Materials quantity variance Labor spending variance Labor efficiency variance $1,650 U $3,100 U $ 750 U Required: 1. For direct materials: a. Compute the actual cost per foot for materials for March. (Round your answer to 2 decimal places.) Actual cost per foot b. 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)) Price variance Spending variance

Explanation / Answer

Material quantity variance = (Standard quantity-actual quantity)standard cost per foot

-1650 = (2875*3-X)5

-1650 = 43125-5X

5X = 44775

X(actual quantity) = 8955

Actual cost per foot = 53730/8955 = 6 per foot

Material price variance = (5-6)*8955 = 8955 U

Material spending varianc e= (2875*15-53730) = 10605 U

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