Question

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

Direct Materials and Direct Labor Variance Analysis

Abbeville Fixture Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 90 employees. Each employee presently provides 36 hours of labor per week. Information about a production week is as follows:

 Standard wage per hr. \$15.00 Standard labor time per faucet 40 min. Standard number of lbs. of brass 3 lbs. Standard price per lb. of brass \$2.40 Actual price per lb. of brass \$2.50 Actual lbs. of brass used during the week 14,350 lbs. Number of faucets produced during the week 4,800 Actual wage per hr. \$14.40 Actual hrs. for the week (90 employees × 36 hours) 3,240 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. 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. 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 \$

 a Direct materials standard cost per unit(3lbs*2.4) \$7.2 Direct labor standard cost per unit(\$15*40/60) \$10 Total standard cost per unit \$17.2 b Direct Materials Price Variance(\$2.4*14350lbs)-(14350lbs*\$2.5) \$1435 unfavourable Direct Materials Quantity Variance(7.2*4800)-(2.4*14350) -\$120 favourable Total Direct Materials Cost Variance \$1315 unfavourable c Direct Labor Rate Variance=3240hrs*(\$15-\$14.4) -\$1944 favourable Direct Labor Time Variance(\$10*4800)-(\$15*3240) \$600 unfavourable Total Direct Labor Cost Variance -\$1344 favourable

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