The following information describes production activities of Mercer Manufacturin

Question

The following information describes production activities of Mercer Manufacturing for the year. Actual direct materials used Actual direct labor used Actual units produced 18,000 lbs. at $4.15 per lb. 5,555 hours for a total of $106,656 30,060 Budgeted standards for each unit produced are 0.50 pounds of direct material at $4.10 per pound and 10 minutes of direct labor at $20.20 per hour. AQ = Actual Quantity SQ = Standard Quantity AP = Actual Price SP = Standard Price AH Actual Hours SH Standard Hours AR = Actual Rate SR = Standard Rate (1) Compute the direct materials price and quantity variances. (2) Compute the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable

Explanation / Answer

Solution:-

1.

2.

Explanation:

(1) Standard quantity 30,060 units × 1/2 pound per unit = 15,030 pounds

(2) Standard hours 30,060 units × 1/6 hour per unit = 5,010 hours

Actual rate per hour = $106,656/5,555 hours = $19.20

Please Rate or comment if you have any doubt regarding this solution.

Actula cost Standard cost AQ * AP AQ * SP SQ * SP 18,000 * $ 4.15 18,000 * $ 4.10 15,030 * $ 4.10 $ 74,700 $ 83,800 $ 61,623 $ 900 $ 12,177

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