You have been given the following information about the production of Usher Co., and are asked to provide the plant manager with information for a meeting with the vice president of operations.
Standard Cost Card | ||
Direct materials (9 pounds at $5 per pound) | $45.00 | |
Direct labor (0.80 hours at $10) | 8.00 | |
Variable overhead (0.80 hours at $5 per hour) | 4.00 | |
Fixed overhead (0.80 hours at $7 per hour) | 5.60 | |
$62.60 |
The following is a variance report for the most recent period of
operations.
Variances |
||||||||
Costs |
Total Standard Cost |
Price |
Quantity |
|||||
Direct materials | $410,400 | $8,398 | F | $9,500 | U | |||
Direct labor | 72,960 | 3,968 | U | 6,400 | U |
How many units were produced during the period?
Number of units |
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How many pounds of raw materials were purchased and used during the period?
Raw material | pounds |
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What was the actual cost per pound of raw materials? (Round answer to 2 decimal places, e.g. 1.25.)
Actual cost per pound of raw materials |
$ |
/lb |
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How many actual direct labor hours were worked during the period?
Actual direct labor hours | hours |
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What was the actual rate paid per direct labor hour? (Round answer to 2 decimal places, e.g. 1.25.)
Actual rate paid per direct labor hour |
$ |
/hr |
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1) Number of units = 410400/45 = 9120 Units
2) Material quantity variance = (SQ-AQ)SP
-9500 = (9120*9*5-5X)
5X = 410400+9500
X(actual qty) = 83980 Pounds
3) Material price variance = (SP-AP)AQ
8398 = (5*83980-83980X)
83980X = 411502
X(actual cost per pound) = 4.90
4) Labor quantity variance = (SH-AH)SR
-6400 = (9120*.80*10-10X)
10X = 79360
X(actual hour) = 7936 Hour
5) Labor rate variance = (SR-AR)AH
-3968 = (10*7936-7936X)
7936X = 83328
X(actual rate) = 10.50 per hour
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