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 30 employees. Each employee presently provides 36 hours of labor per week. Information about a production week is as follows:

Standard wage per hour	$13.2
Standard labor time per unit	15 min.
Standard number of lbs. of brass	2.1 lbs.
Standard price per lb. of brass	$11.25
Actual price per lb. of brass	$11.5
Actual lbs. of brass used during the week	16,871 lbs.
Number of units produced during the week	7,800
Actual wage per hour	$13.6
Actual hours for the week (30 employees × 36 hours)	1,080 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	23.63	=2.1*11.25
Direct labor standard cost per unit	3.30	=13.2*(15/60)
Total standard cost per unit	26.93
b
Direct Materials Price Variance	4218	Unfavorable	=16871*(11.5-11.25)
Direct Materials Quantity Variance	5524	Unfavorable	=11.25*(16871-7800*2.1)
Total Direct Materials Cost Variance	9742	Unfavorable	=(16871*11.5)-(7800*2.1*11.25)
c
Direct Labor Rate Variance	432	Unfavorable	=1080*(13.6-13.2)
Direct Labor Time Variance	-11484	Favorable	=13.2*(1080-7800*15/60)
Total Direct Labor Cost Variance	-11052	Favorable	=(1080*13.6)-(7800*13.2*15/60)