Question

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

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

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

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