Direct Materials and Direct Labor Variance Analysis Shasta Fixture Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 30 employees. Each employee presently provides 40 hours of labor per week. Information about a production week is as follows: Standard wage per hour $10.80 Standard labor time per unit 15 min. Standard number of lbs. of brass 1.7 lbs. Standard price per lb. of brass $13.00 Actual price per lb. of brass $13.25 Actual lbs. of brass used during the week 12,082 lbs. Number of units produced during the week 6,900 Actual wage per hour $11.12 Actual hours for the week (30 employees × 40 hours) 1,200
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
Shasta Fixture Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 30 employees. Each employee presently provides 40 hours of labor per week. Information about a production week is as follows:
| Standard wage per hour | $10.80 |
| Standard labor time per unit | 15 min. |
| Standard number of lbs. of brass | 1.7 lbs. |
| Standard price per lb. of brass | $13.00 |
| Actual price per lb. of brass | $13.25 |
| Actual lbs. of brass used during the week | 12,082 lbs. |
| Number of units produced during the week | 6,900 |
| Actual wage per hour | $11.12 |
| Actual hours for the week (30 employees × 40 hours) | 1,200 |
Required:
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 | $fill in the blank 1 |
| Direct labor standard cost per unit | $fill in the blank 2 |
| Total standard cost per unit | $fill in the blank 3 |
b. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Round your answers to the nearest whole dollar. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
| Direct Materials Price Variance | $fill in the blank 4 | |
| Direct Materials 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. Round your answers to the nearest whole dollar. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
| Direct Labor Rate Variance | $fill in the blank 10 | |
| Direct Labor Time Variance | $fill in the blank 12 | |
| Total Direct Labor Cost Variance | $fill in the blank 14 |
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