Question

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 (7 pounds at $5 per pound)		$35.00
Direct labor (0.70 hours at $10)		7.00
Variable overhead (0.70 hours at $4 per hour)		2.80
Fixed overhead (0.70 hours at $8 per hour)		5.60
		$50.40

The following is a variance report for the most recent period of operations.

				Variances
Costs		Total Standard Cost		Price			Quantity
Direct materials		$406,000		$8,300	F		$9,000	U
Direct labor		81,200		3,924	U		6,000	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

Answer 1

1) Number of unit = 406000/35 = 11600 Units

2) Material quantity variance = (Standard qty-actual qty)Standard price

-9000 = (11600*7*5-5X)

5X = 406000+9000

X(actual quantity purchased and used) = 415000/5 = 83000 Pounds

3) Material price variance = (Standard price-actual price)actual qty

8300 = (5*83000-83000X)

83000X = 406700

X(Actual price) = 4.9

4) Labor efficiency variance = (Standard hour-actual hour)Standard rate

-6000 = (11600*.7*10-10X)

10X = 81200+6000

X(actual hour) = 8720 Hour

5) Labor rate variance = (Standard rate-actual rate)actual hour

-3924 = (10*8720-8720X)

8720X = 91124

X(actual rate) = 10.45