Sharp Company manufactures a product for which the following standards have been

Question

Sharp Company manufactures a product for which the following standards have been set:

During March, the company purchased direct materials at a cost of $55,850, all of which were used in the production of 3,210 units of product. In addition, 4,900 hours of direct labor time were worked on the product during the month. The cost of this labor time was $36,950. The following variances have been computed for the month:

Required:

1. For direct materials:

a. Compute the actual cost per foot for materials for March. (Round your answer to 2 decimal places.)

b. Compute the price variance and the spending variance. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance)).

2. For direct labor:

a. Compute the standard direct labor rate per hour. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

b. Compute the standard hours allowed for the month’s production.

c. Compute the standard hours allowed per unit of product. (Round your answer to 1 decimal place.)

Standard Quantity
or Hours Standard Price
or Rate Standard
Cost Direct materials 3 feet $ 5 per foot $ 15 Direct labor ? hours ? per hour ? e c D wnecaton.con/te.p

Explanation / Answer

1. a. Materials quantity variance = SP (AQ SQ)
$5.00 per foot (AQ 9,630 feet*) = $4,350 U
$5.00 per foot × AQ - $48,150 = $4,350**
$5.00 per foot × AQ = $52,500
AQ = 10,500 feet

*$3,210 units × 3 foot per unit
**When used with the formula, unfavorable variances are positive and favorable variances are negative.
Therefore, $55,850 ÷ 10,500 feet = $5.319 per foot

b. Materials price variance = AQ (AP SP)

10,500 feet ($5.319 per foot $5.00 per foot) = $3,350 U

The total variance for materials is

Materials price variance$ 3,350 U

Materials quantity variance 4350 U

Total variance$ 7,700 U

2) Standard direct labor per hour formula for price variance = (Actual rate- standard rate) * actual hours
1570 = 36950 - X* 4900
X = 7.22

b) Standard hours allowed for the months production labor efficiency variance =
= (AH - SH) * std
680 = ( 5000 - X) * 7.22
680 = 36,100 - 7.22X
X = 4905

c) Standard hours allowed for the months production = 4905 / 3210 = 1.53

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.