Direct Materials and Direct Labor Variance Analysis Abbeville Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 90 employees. Each employee presently provides 36 hours of labor per week. Information about a production week is as follows: $15.00 40 min. 3 lb. Standard wage per hr. Standard labor time per faucet Standard number of lb. of brass Standard price per lb. of brass Actual price per lb. of brass Actual lb. of brass used during the week Number of faucets produced during the week Actual wage per hr. Actual hrs. for the week Required: $2.40 $2.50 14,350 lb. 4,800 $14.40 3,240 hrs. 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 two decimal places, if necessary. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Direct materials price variance Direct materials quantity variance ▾
Direct Materials and Direct Labor Variance Analysis Abbeville Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 90 employees. Each employee presently provides 36 hours of labor per week. Information about a production week is as follows: $15.00 40 min. 3 lb. Standard wage per hr. Standard labor time per faucet Standard number of lb. of brass Standard price per lb. of brass Actual price per lb. of brass Actual lb. of brass used during the week Number of faucets produced during the week Actual wage per hr. Actual hrs. for the week Required: $2.40 $2.50 14,350 lb. 4,800 $14.40 3,240 hrs. 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 two decimal places, if necessary. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Direct materials price variance Direct materials quantity variance ▾
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:Direct Materials and Direct Labor Variance Analysis
Abbeville Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 90 employees. Each employee presently
provides 36 hours of labor per week. Information about a production week is as follows:
$15.00
Standard wage per hr.
Standard labor time per faucet
Standard number of lb. of brass
Standard price per lb. of brass
Actual price per lb. of brass
Actual lb. of brass used during the week
Number of faucets produced during the week
Actual wage per hr.
Actual hrs. for the week
Required:
Total direct materials cost variance
40 min.
$
3 lb.
$2.40
$2.50
14,350 lb.
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 two decimal
places, if necessary. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
Direct materials price variance
Direct materials quantity variance
4,800
$14.40
3,240 hrs.
Transcribed Image Text:c. D
or rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus
Accounting numeric field
sign and an unfavorable variance as a positive number.
Direct labor rate variance
Direct labor time variance
Total direct labor cost variance
$
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