Question

1. Direct Materials and Direct Labor Variance Analysis

   Shasta Fixture Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 30 employees. Each employee presently provides 40 hours of labor per week. Information about a production week is as follows:

   Standard wage per hour	$13.20
   Standard labor time per unit	15 min.
   Standard number of lbs. of brass	1.6 lbs.
   Standard price per lb. of brass	$11.50
   Actual price per lb. of brass	$11.75
   Actual lbs. of brass used during the week	11,371 lbs.
   Number of units produced during the week	6,900
   Actual wage per hour	$13.60
   Actual hours for the week (30 employees × 40 hours)	1,200

   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	$	Unfavorable
   Direct Materials Quantity Variance	$	Unfavorable
   Total Direct Materials Cost Variance	$	Unfavorable

   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	$	Unfavorable
   Direct Labor Time Variance	$	Favorable
   Total Direct Labor Cost Variance	$	Favorable

Answer 1

A.

DIRECT MATERIALS STANDARD COST PER UNIT =

Standard number of lbs. of brass*Standard price per lb. of brass

1.6 lbs.*$11.50 = $18.40

Direct labor standard cost per unit = Standard wage per hour * Standard labor time per unit

= $13.20*15 minutes/60Mintues

= $3.38 per unit

Total standard cost per unit = $18.40 + $3.38

= $21.78

(B)

Direct Materials Price Variance = AQ (SP - AP)

= 11,371 lbs($11.50 - $11.75)

= $2,843 unfabourable

Direct Materials Quantity Variance = SP (SQ for AO - AQ)

= $11.50 (11,040 lbs-11,371lbs)

= $3807 unfabourable

Total Direct Materials Cost Variance = SQ for AO*SP - AQ*AP

= 11,040*$11.50 - 11,371*11.75

= $126,960 - $133,609

= $6,649

(C)

Direct Labor Rate Variance = Actual Hours usd (SR-AR)

=1,200hrs ($13.20 - $13.60)

= $480 unfabourable

Direct Labor Time Variance = Standard Rate (SH for AO* - Actual Hours)

=$13.20 (1725 hrs - 1,200hrs)

= $6,930 fabourable

Total Direct Labor Cost Variance = SR * SH for AO - AR* AH used

= $13.20 * 1,725hrs - 13.60*1,200hrs

=$22,770 - $16,320

= $6,450 fabourable

* SH For AO =( 6,900 units * 15min)/60 minutes

= 1,725 hrs