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 (9 pounds at $5 per pound)		$45.00
Direct labor (0.70 hours at $10)		7.00
Variable overhead (0.70 hours at $5 per hour)		3.50
Fixed overhead (0.70 hours at $7 per hour)		4.90
		$60.40

The following is a variance report for the most recent period of operations.

				Variances
Costs		Total Standard Cost		Price			Quantity
Direct materials		$409,500		$4,188	F		$9,300	U
Direct labor		63,700		4,893	U		6,200	U

How many units were produced during the period?

Number of units

How many pounds of raw materials were purchased and used during the period?

Raw material

pounds

What was the actual cost per pound of raw materials? (Round answer to 2 decimal places, e.g. 1.25.)

Actual cost per pound of raw materials

$

/lb

How many actual direct labor hours were worked during the period?

Actual direct labor hours

hours

What was the actual rate paid per direct labor hour? (Round answer to 2 decimal places, e.g. 1.25.)

Actual rate paid per direct labor hour

$

/hr

Answer 1

a) No of units produced = 409500/45 = 9100 Units

b) Material quantity variance = (SQ-AQ)SP

-9300 = (9100*9*5-5X)

5X = 418800

X(actual pounds purchased) = 418800/5 = 83760 Pounds

c) Material price variance = (SP-AP)AQ

4188 = (5*83760-83760X)

83760X = 418800-4188

X(actual price) = 4.95

d) Labor efficiency variance = (SH-AH)SR
-6200 = (9100*.70*10-10X)

10X = 63700+6200

X(Actual hour) = 6990 Hour

e) Labor rate variance = (SR-AR)AH

-4893 = (10*6990-6990X)

6990X = 69900+4893

X(Actual rate) = 10.70