Question

# Direct Materials and Direct Labor Variance Analysis Abbeville Fixture Company manufactures units in a small manufacturing...

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 32 hours of labor per week. Information about a production week is as follows:

 Standard wage per hour \$16.2 Standard labor time per unit 15 min. Standard number of lbs. of brass 2.1 lbs. Standard price per lb. of brass \$9.25 Actual price per lb. of brass \$9.5 Actual lbs. of brass used during the week 16,223 lbs. Number of units produced during the week 7,500 Actual wage per hour \$16.69 Actual hours for the week (30 employees × 32 hours) 960 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 \$ Unfavorable Direct Materials Quantity Variance \$ Unfavorable Total Direct Materials Cost Variance \$ Unfavorable

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 \$ Unfavorable Direct Labor Time Variance \$ Favorable Total Direct Labor Cost Variance \$ Favorable

a. Direct materials standard cost per unit = 2.1*9.25 = \$19.43
Direct labor standard cost per unit = 16.20*15/60 = \$4.05

Total standard cost per unit = 19.43+4.05 = \$23.48

b. Material price variance = (Standard price - actual price)*actual quantity

= (9.25-9.50)*16223 = \$4056 unfavorable

Material quantity variance = (Standard quantity - actual quantity)*standard rate

= (7500*2.1-16223)*9.25= \$4375 unfavorable

Total Direct Materials Cost Variance = 7500*2.1*9.25-16223*9.5 = \$8431 unfavorable

c. Labor rate variance = (standard rate - actual rate)*actual hours

= (16.20-16.69)*960 = \$470 unfavorable

Labor efficiency variance = (standard hours - actual hours)*standard rate

= (7500*15/60-960)*16.20 = \$-14823 favorable

Total Direct Labor Cost Variance = 7500*15/60*16.20-960*16.69 = \$-14353 favorable

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