Exercise 15-9 You have been given the following information about the production

Question

Exercise 15-9 You have been given the following information about the production of Sheffield Co., and are asked to provide the plant manager with information for a meeting with the vice president of operations Direct materials (5 pounds at $4 per pound) Direct labor (0.8 hours at $9) Variable overhead (0.8 hours at $3 per hour) Fixed overhead (0.8 hours at $7 per hour) Standard Cost Card $20.00 7.20 2.40 5.60 35.20 The following is a variance report for the most recent period of operations Costs Total Standard Cost Price Quantity $340,000 $2,628 F $10,400U 123,400 2,860 U 5,300 U Direct materials Direct labor How many units were produced during the period? (Round answer to 0 decimal places, e.g. 125. Number of units How many pounds of raw materials were purchased and used during the period? (Round answer to 0 decimal places, e.g. 125.) Raw material pounds What was the actual cost per pound of raw materials? (Round answer to 2 decimal places, e.g. 1.25.) Actual cost per pound of raw materials s How many actual direct labor hours were worked during the period? (Round answer to 0 decimal places, e.g. 125.) Actual direct labor hours What was the actual rate paid per direct labor hour? (Round answer to 2 decimal places, e.g. 1.25.) hours Actual rate paid per direct labor hour /hr

Explanation / Answer

A)Units produced =Standard material cost /unit standard cost

                 = 340000/20

                = 17000 units

b)Material quantity variance = [AQ*SR]-standard cost

10400 = [AQ*4]- 340000

   10400+340000 = 4AQ

AQ = 35040/4= 87600 POUNDS

c)Material price variance =AQ[AR-SR]

-2628 = 87600[AR-4]

-2628/87600 =AR-4

   AR = -.03+4

        = $ 3.97 per pound

4)Labor efficiency variance =[AH*SR]-STandard cost

5300 = [AH*9]-123400

5300+123400 = 9AH

   AH = 128700/9

        = 14300 hours

5)Labor rate variance =AH[AR-SR]

2860 =14300 [AR-9]

2860/14300 =AR-9

   AR = .2+9

      = $ 2.9 per hour

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