Direct materials and direct labor variance analysis Abbeville Fixture Company manufactures faucets in a small manufacturing facility . The faucets are made from brass. Manufacturing has 90 employees. Each employee presently provide 36 hours of labor per week. Information about a production week is as follows : Standard wage per hr. $15.00 Standard labor time per faucet 40mm Standard number of lbs. of brass 3lbs. Standard price per lb. of brass $2.40 Actual price per lb. of brass $2.50 Actual lbs. of brass used during the week 14,350 lbs. Number of faucets produced during the week 4,800 Actual wage per hr. $14.40 Actual hrs. for the week (90 employees x 36 hours 3,240 Instructions Determine (A) the standard cost per unit for direct materials and direct labor ; (B) the direct materials price variance, direct materials quantity variance, and the total direct materials cost variance, and(c) the direct labor rate variance, direct labor time variance, and total direct labor cost variance.
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
Abbeville Fixture Company manufactures faucets in a small manufacturing facility . The faucets are made from brass.
Manufacturing has 90 employees. Each employee presently provide 36 hours of labor per week. Information about a production week is as follows :
| Standard wage per hr. | $15.00 |
| Standard labor time per faucet | 40mm |
| Standard number of lbs. of brass |
3lbs. |
| Standard price per lb. of brass | $2.40 |
| Actual price per lb. of brass | $2.50 |
| Actual lbs. of brass used during the week | 14,350 lbs. |
| Number of faucets produced during the week | 4,800 |
| Actual wage per hr. | $14.40 |
| Actual hrs. for the week (90 employees x 36 hours | 3,240 |
Instructions
Determine (A) the
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