Problem 10-11 (Algo) Direct Materials and Direct Labor Variances; Computations from Incomplete Data [LO10-1, LO10-2]
Sharp Company manufactures a product for which the following standards have been set:
|Direct materials||3||feet||$||5||per foot||$||15|
|Direct labor||?||hours||?||per hour||?|
During March, the company purchased direct materials at a cost of $49,170, all of which were used in the production of 2,750 units of product. In addition, 4,500 direct labor-hours were worked on the product during the month. The cost of this labor time was $36,000. The following variances have been computed for the month:
|Materials quantity variance||$||3,450||U|
|Labor spending variance||$||3,000||
|Labor efficiency variance||$||750||
1. For direct materials:
a. Compute the actual cost per foot of materials for March.
b. Compute the price variance and the spending variance.
2. For direct labor:
a. Compute the standard direct labor rate per hour.
b. Compute the standard hours allowed for the month’s production.
c. Compute the standard hours allowed per unit of product.
Complete this question by entering your answers in the tabs below.
For direct materials, compute the actual cost per foot of materials for March. (Round your answer to 2 decimal places.)
|Actual Cost||per foot|
For direct materials, 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). Input all amounts as positive values.)
2a. For direct labor, compute the standard direct labor rate per hour. (Round your answer to the nearest whole dollar.)
2b. For direct labor, compute the standard hours allowed for the month’s production. (Do not round your intermediate value.)
2c. For direct labor, compute the standard hours allowed per unit of product. (Round your answer to 1 decimal place.)
|2a. Standard Direct labor rate per hour|
|2b. Standard hours allowed for the month's production|
|2c. Standard hours allowed per unit of product|
1a) Material quantity variance = (SQ-AQ)SP
-3450 = (2750*3*5-5X)
5X = 41250+3450
X(Actual foot) = 44700/5 = 8940
Actual Cost per foot = 49170/8940 = 5.5
1b) Material price variance = (5-5.5)*8940 = 4470 U
Material spending variance = (2750*15-49170) = 7920 U
2a) Labor rate variance = 3000-750 = 2250 U
Labor rate variance = (SR-AR)AH
-2250 = (X*4500-36000)
-4500X = -33750
X(Standard labor rate per hour) = 33750/4500 = 7.5
2b) Labor efficiency variance = (SH-AH)SR
-750 = (X*7.5-4500*7.5)
-7.5X = -33000
X(Standard hour) = 4400 Hour
2c) Standard hour per unit = 4400/2750 = 1.60 hour per unit
Get Answers For Free
Most questions answered within 1 hours.