Question

Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing. Each of the products uses two raw materials—X442 and Y661. The company uses a standard cost system, with the following standards for each product (on a per unit basis):

	Raw Material			Standard Labor Time
Product	X442	Y661		Sintering	Finishing
Alpha6	1.2 kilos	2.0 liters		0.40 hours	0.80 hours
Zeta7	3.0 kilos	4.0 liters		0.10 hours	0.60 hours

Information relating to materials purchased and materials used in production during May follows:

Material	Purchases		Purchase Cost	Standard Price		Used in Production
X442	14,500	kilos	$60,900	$4.00	per kilo	9,000	kilos
Y661	15,500	liters	$27,900	$1.90	per liter	13,500	liters

The following additional information is available:

The company recognizes price variances when materials are purchased.

The standard labor rate is $21.00 per hour in Sintering and $19.50 per hour in Finishing.

During May, 1,250 direct labor-hours were worked in Sintering at a total labor cost of $28,750, and 2,900 direct labor-hours were worked in Finishing at a total labor cost of $62,350.

Production during May was 2,000 Alpha6s and 2,250 Zeta7s.

Required:

1. Complete the standard cost card for each product, showing the standard cost of direct materials and direct labor.

2. Compute the materials price and quantity variances for each material.

3. Compute the labor rate and efficiency variances for each operation.

Answer 1