Part of your company\'s accounting database was destroyed when Godzilla attacked

Question

Part of your company's accounting database was destroyed when Godzilla attacked the city. You have been able to gather the following data from your files. Reconstruct the remaining information using the available data. All of the raw material purchased during the period was used in production. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable" Select "None" and enter "O" for no effect (i.e., zero variance). Round "per unit" answer values to 2 decimal places.) Direct Labor Direct Material 11.00 per lb Standard price or rate per unit of input Standard quantity per unit of output Actual quantity used per unit of output Actual price or rate per unit of input Actual output Direct-material price variance Direct-material quantity variance Total direct-material variance Direct-labor rate variance Direct-labor efficiency variance Total direct-labor variance per hour hours per unit lbs per unit lbs per unit 2.60 hours 15.00 per hour 7,000 units $ 10.00 per lb 7,000 units $ 48,300 F $34,000 F 19,600 F 1,400 F

Explanation / Answer

Direct Labor Direct material Standard price or rate per unit of input 14 per hour 11 per lb standard quantity per unit of output 2.8 hours per unit 6.71 lbs per unit Actual quantity used per unit of output 2.6 hours. 6.9 lbs per unit actual price or rate per unit of input 15 per hour $10 per lb Actual output 7,000 units 7,000 units Direct material price variance 48,300 F direct-material quantity variance 14,300 U. total direct-material variance 34,000 F direct labor-rate variance 18,200 U direct labor-efficiency variance 19,600 F total direct -labor variance 1,400 F Direct labor rate variance Direct labor rate variance (AR - SR)*AH =18,200 (10 -11)*x    = 48300 (15 - x)*18200 = 18,200 x                    = 48300 x                     = (273000-18200)/18200 14 actual qty per unit = 48300/7000 6.9 Direct labor efficiency variance (18200 - x ) *14 = 19600 Direct material Quantity variance x                  = (254,800+19600)/14 (48300 - *x)*11 = 14300 19600 48300*11 - x*11 = 14300 x                           = (531,300-14300)/11 standard hour per unit 19600/7000 x                         = 47000 2.8 x = 47000/7000 6.71

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