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 $

Homework Answers

Answer #1
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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