Question

#11

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 40 employees. Each employee presently provides 40 hours of labor per week. Information about a production week is as follows:

Standard wage per hour	$12.6
Standard labor time per unit	20 min.
Standard number of lbs. of brass	1.7 lbs.
Standard price per lb. of brass	$11
Actual price per lb. of brass	$11.25
Actual lbs. of brass used during the week	15,234 lbs.
Number of units produced during the week	8,700
Actual wage per hour	$12.98
Actual hours for the week (40 employees × 40 hours)	1,600 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	18.70		=11*1.7
Direct labor standard cost per unit	4.20		=12.6*(20/60)
Total standard cost per unit	22.90
b
Direct Materials Price Variance	3809	Unfavorable	=15234*(11.25-11)
Direct Materials Quantity Variance	4884	Unfavorable	=11*(15234-8700*1.7)
Total Direct Materials Cost Variance	8693	Unfavorable	=(15234*11.25)-(8700*18.7)
c
Direct Labor Rate Variance	608	Unfavorable	=1600*(12.98-12.6)
Direct Labor Time Variance	-16380	Favorable	=12.6*(1600-8700*20/60)
Total Direct Labor Cost Variance	-15772	Favorable	=(1600*12.98)-(8700*12.6*20/60)