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Question: Direct Materials and Direct Labor Variance Analysis Abbeville Fixture Company manufactures units ...
Direct Materials and Direct Labor Variance Analysis
Abbeville Fixture Company manufactures units in a small manufacturing facility. The units are made from brass. Manufacturing has 40 employees. Each employee presently provides 36 hours of labor per week. Information about a production week is as follows:
Required:
a. Determine the standard cost per unit for direct materials and direct labor. Round the cost per unit to two decimal places.
b. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Round your answers to the nearest whole dollar. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
c. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Round your answers to the nearest whole dollar. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
Standard wage per hour $12 Standard labor time per unit 20 min. Standard number of lbs. of brass 1.8 lbs. Standard price per lb. of brass $12.25 Actual price per lb. of brass $12.5 Actual lbs. of brass used during the week 12,793 lbs. Number of units produced during the week 6,900 Actual wage per hour $12.36 Actual hours for the week (40 employees × 36 hours) 1,440 hrs.Explanation / Answer
A Direct materials standard cost per unit $21.60 ($12.00 × 1.8 lbs.) Direct labor standard cost per unit $4 $12× (20 min./60 min.) Total standard cost per unit $25.60 B (i) Direct Materials Price Variance (actual price - standard price) x actual quantity ($13-$12)12793lbs = 12793 Unfavourable (ii) Direct materials quantity variance = (Actual quantity - standard quantity) x standard price (12793-1.8*6900)$12 4476 Unfavourable (iii) Total direct materials cost variance = Direct materials price variance + Direct materials quantity variance (12793 + 476) unfavourable =17269 Unfavourable C (i) Direct labor rate variance = (Actual rate per hour - standard rate per hour) x actual hours =(12.36-12)1440 518.4 Unfavourable (ii) Direct labor time variance= (Actual direct labor hours - standard direct labor hours) x standard rate per hour (1440-6900*20min/60min)*$12 per hr (1440-2300)*12 10320 Favourable (iii) Total direct labor cost variance = direct labor rate variance + direct labor time variance =518.40 U + 10320F 9801.60F
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