Gepp Manufacturing Company produces a single product. The following data apply t

Question

Gepp Manufacturing Company produces a single product. The following data apply to the standard cost of materials and labor associated with making the product: Materials quantity per unit Materials price Labor quantity per unit Labor price 1 pound 12.50 per pound 2 hours 522.50 per hour During the year, the company made 1,800 units of product. At the end of the year, the following variances had been calculated Materials usage variance Materials price variance Labor usage variance Labor price variance $1,000 Favorable $ 860 Unfavorable $4,500 Unfavorable $7,125 Favorable Required a. Determine the actual amount of materials used b. Determine the actual price paid per pound for materials. (Round your answer to 2 decimal places.) c. Determine the actual labor hours used d. Determine the actual labor price per hour. (Round your answer to 2 decimal places.) a. b. c. d. Actual quantity Actual price (materials) Actual labor hours Actual labor price pounds per pound per hour

Explanation / Answer

a) Material usage variance = (Standard qty-actual qty)Standard price

1000 = (1800*1-X)12.50

1000 = 22500-12.50X

12.50X = 21500

X(Actual quantity) = 1720 pounds

b) Material price variance = (Standard price-actual price)actual pound

-860 = (12.50-X)1720

-860 = 21500-1720X

1720X = 22360

X(actual price) = 13 per pound

c) Labour efficiency variance = (Standard hour-actual hour)standard rate

-4500 = (1800*2-X)22.50

-4500 = 81000-22.50X

22.50X = 85500

X(actual hour) = 3800 hour

d) Labour price variance = (Standard price-actual price)actual hour

7125 = (22.50-X)3800

7125 = 85500-3800X

3800X = 78375

X(actual labour price) = 20.63 per hour

  

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