Question

A fire destroyed most of Ordessa Products Corporation records. Megan Carey, the company's accountant, is trying to piece together the company's operating results from salvaged documents. Sher discovered the following data:

Standard materials quantity per unit: 2.5 pounds

Standard materials price: $8 per pound

Standard labor quamntity per unit: 0.6 hour

Standard labor price: $24 per hour

Actual number of producs produced: 8,000 units

Materials price variance: $3,168 Favorable

Materials usage variance: $1,600 Favorable

Labor price variance: $3,094 Unfavorable mood

Laborusage variance: $1,902 Unfavorable

Required

a. Determine the actual amount of materials used.

b. Determine the actual price per pund paid for materials.

c. Determine the actual labor hours used.

d. Determine the actual price per hour.

Answer 1

a) Actual amount of material used :

Material Usage variance = (standard qty-actual qty)Standard price per pound

1600 = (8000*2.5*8-8X)

1600 = 160000-8X

8X = 158400

X(Actual quantity used) = 19800 pounds

b) Actual price per pound

Material price variance = (Standard price-actual price)Actual quantity

3168 = (8*19800-19800X)

3168 = 158400-19800X

19800X = 155232

X(actual price per pound) = 155232/19800 = 7.84 per pound

Actual hours used

Labour efficiency variance = (Standard hour-actual hour)standard rate

-1902 = (8000*.60*24-24X)

-1902 = 115200-24X

24X = 117102

X(actual labour hour used) = 4879.25 HOur

Actual price per hour

Labour rate variance =(Standard rate-actual rate)actual hour

-3094 = (24*4879.25-4879.25X)

4879.25X = 120196

X(actual price per hour) = 24.63 per hour