Book Direct Materials and Direct Labor Variance Analysis Faucet Industries Inc. manufactures faucets in a small manufacturing facility. The faucets are made from zinc. Faucet Industries has 50 employees. Each employee presently provides 36 hours of labor per week. Information about a production week is as follows: Standard wage per hour $12.60 Standard labor time per faucet 10 min. Standard number of lbs. of zinc 2 lbs. Standard price per lb. of zinc $10.25 Actual price per lb. of zinc $10.50 Actual lbs. of zinc used during the week 14,200 lbs. Number of faucets produced during the week 6,900 Actual wage per hour $13.00 Actual hours per week 1,800 hrs. Required: a. Determine the standard cost per faucet for direct materials and direct labor. Do not round intermediate calculations and round your answers to the nearest cent. Direct materials standard cost per faucet $fill in the blank 1 Direct labor standard cost per faucet fill in the blank 2 Total cost per faucet $fill in the blank 3 b. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative amount, and an unfavorable variance as a positive amount. Price variance $fill in the blank 4 Quantity variance fill in the blank 6 Total direct materials cost variance $fill in the blank 8 c. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative amount, and an unfavorable variance as a positive amount. Rate variance $fill in the blank 10 Time variance fill in the blank 12 Total direct labor cost variance $fill in the blank 14
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Direct Materials and Direct Labor
Faucet Industries Inc. manufactures faucets in a small manufacturing facility. The faucets are made from zinc. Faucet Industries has 50 employees. Each employee presently provides 36 hours of labor per week. Information about a production week is as follows:
| Standard wage per hour | $12.60 |
| Standard labor time per faucet | 10 min. |
| Standard number of lbs. of zinc | 2 lbs. |
| Standard price per lb. of zinc | $10.25 |
| Actual price per lb. of zinc | $10.50 |
| Actual lbs. of zinc used during the week | 14,200 lbs. |
| Number of faucets produced during the week | 6,900 |
| Actual wage per hour | $13.00 |
| Actual hours per week | 1,800 hrs. |
Required:
a. Determine the
| Direct materials standard cost per faucet | $fill in the blank 1 | |
| Direct labor standard cost per faucet | fill in the blank 2 | |
| Total cost per faucet | $fill in the blank 3 |
b. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative amount, and an unfavorable variance as a positive amount.
| Price variance | $fill in the blank 4 |
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| Quantity variance | fill in the blank 6 |
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| Total direct materials cost variance | $fill in the blank 8 |
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c. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative amount, and an unfavorable variance as a positive amount.
| Rate variance | $fill in the blank 10 |
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| Time variance | fill in the blank 12 |
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| Total direct labor cost variance | $fill in the blank 14 |
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