Direct Materials and Direct Labor Variance Analysis Abbeville Fixture Company ma

Question

Direct Materials and Direct Labor Variance Analysis Abbeville Fixture Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 50 employees. Each employee presently provides 32 hours of labor per week. Information about a production week is as follows Standard wage per hour Standard labor time per faucet Standard number of Ibs. of brass Standard price per lb. of brass Actual price per lb. of brass Actual lbs. of brass used during the week Number of faucets produced during the week Actual wage per hour Actual hours per week (50 employees × 32 hours) 1,600 hrs Required: a. Determine the standard cost per unit for direct materials and direct labor. Round the cost per unit to two decimal places $16.2 20 min 1.9 Ibs $9.25 $9.5 17,613 lbs 9,000 $16.69 17.58 Direct materials standard cost per faucet Direct labor standard cost per faucet Total standard cost per faucet 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 Price variance 22.98 X Unfavorable Unfavorable Unfavorable Quantity variance Total direct materials cost variance 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. Unfavorable Favorable Favorable Rate variance Time variance Total direct labor cost variance

Explanation / Answer

a) 1 Calculation of standard cost per unit for direct materials: Standard number of lbs. of brass per unit 1.9 lbs Standard price per lb. of brass $9.25 Standard cost per unit for direct materials = 1.9lbs *$9.25 $                17.58 2 Calculation of standard cost per unit for direct Labor: Standard labor time per faucet (Hours) = 20 minutes / 60 minutes = 0.3333 Hours Standard wage per hour. $16.20 Standard cost per unit for direct Labor = 0.3333 hours * $16.2 $5.40 3 Total standard cost ($17.58+$5.40) $                22.97 b) 1 Calculation of direct materials price variance: Formula : Direct materials price variance = (Actual Price - Standard Price)* Actual Quantity Actual Price $9.50 Standard Price $9.25 Actual Quantity 17613 lbs Direct materials price variance = (9.5-9.25)*17613 = $4,403.25 Unfavorable 2 Calculation of direct materials quantity variance: Formula: Direct materials quantity variance = (Actual Quantity - Standard Quantity)* Standard Price Actual Quantity 17613 lbs Standard Quantity = Number of faucets produced * Standard number of lbs. of brass = 9000*1.9 = 17100 Standard Price $9.25 Direct materials quantity variance = (17613-17100)*$9.25 $4,745.25 Unfavorable 3 Calculation of total direct materials cost variance: Direct materials price variance (a) $4,403.25 Unfavorable Direct materials quantity variance (b) $4,745.25 Unfavorable Total direct materials cost variance   c= a+b $9,148.50 Unfavorable c) 1 Calculation of direct labour rate variance: Formula : Direct labour rate variance = (Actual rate - Standard rate)* Actual hours Actual rate $16.69 Standard rate $16.20 Actual hrs 1600 hrs Direct labour rate variance = ($16.69-$16.2)*1600 = $784.00 Unfavorable 2 Calculation of direct labour time variance: Formula: Direct labour time variance: = (Actual hrs - Standard hrs)* Standard rate Actual hrs 1600 hrs Standard hrs = Number of faucets produced * Standard hrs per faucets = 9000*20/30 = 3000 hrs Standard rate $16.20 Direct labour time variance = (1600-3000)*$16.25 ($22,680.00) Favorable 3 Calculation of total direct labours cost variance: Direct labour rate variance (a) $784.00 Unfavorable Direct labour time variance (b) ($22,680.00) Favorable Total direct labor cost variance   c= a+b ($21,896.00) Favorable

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