Question

Direct Materials and Direct Labor Variance Analysis

Abbeville Fixture Company manufactures units in a small manufacturing facility. The units are made from brass. Manufacturing has 70 employees. Each employee presently provides 35 hours of labor per week. Information about a production week is as follows:

Standard wage per hour	$11.4
Standard labor time per unit	20 min.
Standard number of lbs. of brass	1.9 lbs.
Standard price per lb. of brass	$11.5
Actual price per lb. of brass	$11.75
Actual lbs. of brass used during the week	16,439 lbs.
Number of units produced during the week	8,400
Actual wage per hour	$11.74
Actual hours for the week (70 employees × 35 hours)	2,450 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 unit	$
Direct labor standard cost per unit	$
Total standard cost per unit	$

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.

Direct Materials Price Variance	$
Direct Materials 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.

Direct Labor Rate Variance	$
Direct Labor Time Variance	$
Total Direct Labor Cost Variance	$

Answer 1

a
Direct materials standard cost per unit	21.85		=11.5*1.9
Direct labor standard cost per unit	3.80		=11.4*20/60
Total standard cost per unit	25.65
b
Direct materials price variance	4110	Unfavorable	=16439*(11.75-11.5)
Direct materials quantity variance	5509	Unfavorable	=11.5*(16439-8400*1.9)
Total Direct materials cost variance	9618	Unfavorable	=(16439*11.75)-(8400*1.9*11.5)
c
Direct labor rate variance	833	Unfavorable	=2450*(11.74-11.4)
Direct labor time variance	-3990	Favorable	=11.4*(2450-8400*20/60)
Total Direct labor cost variance	-3157	Favorable	=(2450*11.74)-(8400*11.4*20/60)