You have been given the following information about the production of Usher Co.

Question

You have been given the following information about the production of Usher Co. and are asked to provide the plant manager with information for a meeting with the vice president of operations. Standard Cost Card Direct materials (5 pounds at $4 per pound) $20.00 Direct Labor (0.8 hours at $10) 8.00 Variable Overhead (0.8 hours at $3 per hour) 2.40 Fixed Overhead (0.8 hours at $7 per hour) 5.60 $36.00 The following is a variance report for the most recent period of operations. Variances Costs Total Standard Cost Price Quantity Direct materials $410,000 $2,095 F $9,000 U Direct labor 180,000 3,840 U 6,000 U (a)How man units were produced during the period? (b)How many pounds of raw materials were purchased and used during the period? (c’)What was the actual cost per pound of raw materials? (d)How many actual direct labor hours were worked during the period? (e)What was the actual rate paid per direct labor hour?

Explanation / Answer

Req A: Standard material cost per unit of output: $ 20 per unit Standard material cost for actual output: $ 410,000 Actual Output: Total Standard material cost / Standard material cost per unit = $ 410,000 /20 = 20,500 units Req B: Material Quanity variance: $ 9,000 U Material Price variance: $ 2095 F Standard Quantity per unit of output: 5 pounds Actual Output: 20,500 units Standard Quantity Allowed: 20,500 *5= 102,500 pounds Standard price per unit: $ 4 per pound material Quantity Variannce: Standard Price per pound (Standard Quantity allowed- Actual Quantity) (9000) = $4.00 (102,500 pounds - Actual Quantity) Actual Quantity used or purchassed = 104,750 pounds Req C: Material Price variance: Actual Quantity used (Sstd price per pound- Actual Price per pound) 2095 = 104,750 pounds (4.00 - Actual Price per pound) Actual Price per pound: $ 3.98 per pound Req D: Std hours per unit of output: 0.80 hour per unit Standard hours allowed (20,500 hours *0.80)= 16,400 hours Standard rate per hour: $ 10 Labour Efficiency variancec: Standard rate per hour (Standard Hours- Actual Hours) 6,000 U = 10.00 (16400 hours- Actual Hours) Actual Hours = 17,000 hours Req E: Labour rate variance: 3840 U Labour rate variance: Actual Hours (std rate per hour - actual rate per hour) 3840 U = 17000 (10 - Actual Rate) Actual rate per hour: 10.226 perhour

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