Question

Vitex, Inc. manufactures a popular consumer product and it has provided the following data excerpts from its standard cost system:

Inputs	(1) Standard Quantity or Hours		(2) Standard Price or Rate			Standard Cost (1) × (2)
Direct materials	2.10	pounds	$	16.80	per pound	$	35.28
Direct labor	1.00	hours	$	15.60	per hour	$	15.60
Variable manufacturing overhead	1.00	hours	$	9.20	per hour	$	9.20
Total standard cost per unit						$	60.08

	Total		Variances Reported
	Standard Cost*		Price or Rate			Quantity or Efficiency
Direct materials	$	670,320	$	12,151	F	$	33,600	U
Direct labor	$	296,400	$	4,000	U	$	15,600	U
Variable manufacturing overhead	$	174,800	$	4,800	F	$	?†	U

*Applied to Work in Process during the period.

The company's manufacturing overhead cost is applied to production on the basis of direct labor-hours. All of the materials purchased during the period were used in production. Work in process inventories are insignificant and can be ignored.

Required:

1. How many units were produced last period?

2. How many pounds of direct material were purchased and used in production?

3. What was the actual cost per pound of material? (Round your answer to 2 decimal places.)

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

5. What was the actual rate paid per direct labor-hour? (Round your answer to 2 decimal places.)

Answer 1

1. Number of units = Total standard cost ÷ Standard cost per unit Number of units

= $670320 ÷ $35.28 = 19000

2. AQ = [(SQ X SP) ± Quantity variance] ÷ SP AQ

= ($670320 + $33600) ÷ $16.80 per lb = 41900 pounds

3. AP = [(AQ X SP) ± Price variance] ÷ AQ AP

= [(41000 X $16.80) – $12151] = $676649 ÷ 138,000 lb = $16.50/lb

4. AH = [(SH X SR) ± Quantity variance] ÷ SR AH

= ($296400 + $15600) ÷ $15.60/hr = 20000 hours

5. AR = [(AH X SR) ± Price variance] ÷ AH AP

= [(20000 X $15.60) + $4000] = $316000 ÷ 20000 hr = $15.80/hr