Sharp Company manufactures a product for which the following standards have been
ID: 2592368 • Letter: S
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 $59,850, all of which were used in the production of 3,410 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 $40,950. 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.)
Standard direct labor rate per hour: $8.00
b. Compute the standard hours allowed for the month’s production. (need answer)
c. Compute the standard hours allowed per unit of product. (Round your answer to 1 decimal place.) (need answer)
Standard Quantityor Hours Standard Price
or Rate Standard
Cost Direct materials 3 feet $ 5 per foot $ 15 Direct labor ? hours ? per hour ?
Explanation / Answer
2. For direct labor:
b. Computation of the standard hours allowed for the month’s production
Labor efficiency variance = (standard hours - Actual Hours) x Standard Price
$1,720 = (standard hours - 4,900) x $8.00
standard hours = ($1,720/$8.00) + 4,900 =215 + 4,900
standard hours = 5,115 hours
c. Computation of the standard hours allowed per unit of product
Standard hours per unit = 5,115 / 3,410 = 1.50 hours per unit
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