Question

Thornton Manufacturing Company produces a single product. The following data apply to the standard cost of materials and labor associated with making the product:

Materials quantity per unit		1	pound
Materials price	$	6.50	per pound
Labor quantity per unit		2	hours
Labor price	$	10.50	per hour

During the year, the company made 2,100 units of product. At the end of the year, the following variances had been calculated.

Materials usage variance	$	1,495	Favorable
Materials price variance	$	187	Unfavorable
Labor usage variance	$	3,675	Unfavorable
Labor price variance	$	3,640	Favorable
a) Determine the actual amount of materials used. b) Determine the actual price paid per pound for materials. (Round your answer to 2 decimal places.) c) Determine the actual labor hours used. d) Determine the actual labor price per hour. (Round your answer to 2 decimal places.)

Answer 1

a) Materials usage variance = (Standard quantity of material - Actual material used) x Standard rate
$1,495 = {(2,100 x 1) -  Actual material used} x $6.50
Actual material used = 1,870

b) Materials price variance = (Standard price per pound - Actual price per pound) x Actual material used
- $187 = ($6.50 - Actual price per pound) x 1,870
  Actual price per pound = $6.6 per pound

c) Labor usage variance = (Standard labor hours - Actual labor hours used) x Standard rate
- $3,675 = {(2,100 x 2) - Actual labor hours used) x $10.50
  Actual labor hours used = 4,550

d)   Labor price variance = (Standard labor price per hours - Actual labor price per hours) x Actual labor hours used
$3,640 = ($10.50 - Actual labor price per hours) x 4,550
Actual labor price per hours = $9.70