Chapter 22 Assignment eBook Show Me How Calculator Direct Materials and Direct L

Question

Chapter 22 Assignment eBook Show Me How Calculator 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 70 employees. Each employee presently provides 40 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 lbs. of brass Standard price per lb. of brass Actual price per lb. of brass Actual Ibs. of brass used during the week Number of faucets produced during the week Actual wage per hour Actual hours per week (70 employees × 40 hours) 2,800 hrs. Required: a. Determine the standard cost per unit for direct materials and direct labor. Round the cost per unit to two decimal places. 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 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 Rate variance Time variance Total direct labor cost variance $11.4 20 min. 1.2 lbs. $11.5 $11.75 9,641 lbs. 7,800 $11.74 13.8 Unfavorable Unfavorable Unfavorable Unfavorable Unfavorable Unfavorable

Explanation / Answer

1) Direct labour standard cost per faucet :

Direct labour cost for 60 minutes = $11.40

Standard time to produce one Faucet = 20 minutes

Standard labour cost per faucet = $11.40 * 20/60

= $3.80

2) Total Standard cost per faucet :

Total Standard cost per faucet = Standard material cost + Standard labour cost

= $13.80 + $3.80

= $17.6

3) Calculation of Direct material price variance :

Direct material price variance = Actual quantity * (Standard price - Actual price)

= 9,641*($11.50 - $11.75)

= ($2,410) Unfavourable

4) Calculation of Direct material quantity variance :

Direct material quantity variance = Standard price per unit *(Standard quantity - Actual quantity)

= $11.50 * ((7,800*1.2) - 9,641)

= ($3,231.50) Unfavourable

5) Calculation of Direct material cost variance :

Direct material cost variance = Direct material price variance + Direct material quantity variance

= ($2,410) + ($3,231.50)

= ($5,641.50) Unfavourable

6) Calculation of Direct labour rate variance :

Direct labour rate variance = Actual hours * (Standard rate - Actual rate)

= 2,800 * ($11.40 - $11.74)

= ($952) Unfavourable

6) Calculation of Direct labour time variance :

Direct labour time variance = Standard rate per hour*(Standard hours - Actual hours)

= $11.40 * ((7,800*20/60) - 2,800)

  = ($2,280) Unfavourable

7) Calculation of Direct labour cost variance :

Direct labour cost variance = Direct labour rate variance + Direct labour time variance

= ($952) + ($2,280)

   = ($3232) Unfavourable

** ( ) Implies negative amount.

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