Exercise 23-9 (Part Level Submission) Variances Costs Total Standard Cost Price
ID: 2551830 • Letter: E
Question
Exercise 23-9 (Part Level Submission)
Variances
Costs
Total Standard Cost
Price
Quantity
(a)
Exercise 23-9 (Part Level Submission)
You have been given the following information about the production of Usher Co., and are asked to provide the plant manager with information for a meeting with the vice president of operations.Standard Cost Card Direct materials (9 pounds at $4 per pound) $36.00 Direct labor (0.80 hours at $7) 5.60 Variable overhead (0.80 hours at $3 per hour) 2.40 Fixed overhead (0.80 hours at $8 per hour) 6.40 $50.40
The following is a variance report for the most recent period of operations.
Variances
Costs
Total Standard Cost
Price
Quantity
Direct materials $407,000 $5,770 F $9,200 U Direct labor 63,314 4,200 U 6,600 UExplanation / Answer
Total direct material variance = 9,200(U) - 5,770(F) = 3,430 (U)
Therefore, total actual cost for direct material = Standard cost + Total direct material variance (since its unfavourable, actual cost is greater than standard cost)
= 407,000 + 3,430 = $410,430
Standard quantity purchased = Total Standard cost/standard cost per pound = 407,000/4 = 101,750 units
Direct material quantity variance = Standard price x (Standard Quantity - Actual Quantity) (Actual quantity assumed to be (x))
-9,200 = 4 x (101,750 - (x))
Therefore, if we solve for x, we see, the following,
101,750 - (x) = -2,300
(x) = 101,750 + 2,300 = 104,050
Number of units produced during the period = 104,050/9 = 11,561 units
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