New Jersey Valve Company manufactured 8,200 units during January of a control va

Question

New Jersey Valve Company manufactured 8,200 units during January of a control valve used by milk processors in its Camden plant. Records indicated the following: Direct labor Direct material purchased Direct material used 33,500 hr. at $14.90 per hr. 27,000 lb. at $3.50 per lb. 24,300 1b. The control valve has the following standard prime costs: Direct material Direct labor $10.20 4 hr. at $15.20 per hr.60.80 $71.00 31b. at $3.40 per 1b. Standard prime cost per unit Required: 1. Prepare a schedule of standard production costs for January, based on actual production of 8,200 units. 2. For the month of January, compute the following variances.

Explanation / Answer

1 Standard costs Direct materials 83640 Direct labor 498560 Total standard production costs 582200 2 Direct material price variance=24300*(3.5-3.4) = $2430 Unfavorable Direct material quantity variance=3.4*(24300-8200*3)= $1020 Favorable Direct material price variance=27000*(3.5-3.4) = $2700 Unfavorable Direct labor rate variance=33500*(14.9-15.2)= $10050 Favorable Direct labor efficiency variance=15.2*(33500-8200*4)= $10640 Unfavorable

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