Direct Materials and Direct Labor Variance AnalysisShasta Fixture Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 60 employees. Each employee presently provides 32 hours of labor per week. Information about aproduction week is as follows:Standard wage per hour$13.80Standard labor time per unit20 min.Standard number of Ibs. of brass1.3 lbs.Standard price per Ib. of brass$9.75Actual price per lb. of brass$10.00Actual Ibs. of brass used during the week8,034 lbs.Number of units produced during the week6,000Actual wage per hour$14.21Actual hours for the week (60 employees x 32 hours)1,920Required: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 unitDirect labor standard cost per unitTotal standard cost per unit%24b. 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 usinga minus sign and an unfavorable variance as a positive number.Direct Materials Price VarianceDirect Materials Quantity VarianceTotal Direct Materials Cost Variancec. 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 signand an unfayorable variance as a positive number.Direct Labor Rate VarianceDirect Labor Time VarianceTotal Direct Labor Cost Variance

a. Determine standard cost per unit Direct material standard cost per unit = Std. number of lbs of brass * Std. price per lb. of brass = 1.3 * $9.75 = $12.675 Direct labor standard cost per unit = Std. wage per minute * std. labor minute per unit = $13.8 / 60 * 20 = $4.6 Total standard cost per unit = Direct material standard cost per unit + Direct labor standard cost per unit = = $12.675 + $4.6 = $17.275b. Material price variance Direct-material price variance = (Standard price - Actual price) * Actual quantity used Standard price = $9.75 per pound Actual price = $10.00 per pound Actual quantity used = 8034 pound Direct-material price variance = ($9.75 - $10.00) * 8034 = - $2,008.5 (unfavourable) Material Quantity Variance Direct-material quantity variance = (Standard quantity for actual output - Actual quantity used) * Standard price Standard quantity for actual output - (1.3 * 6000) = 7800 pound Actual quantity - 8034 pound Standard price - $9.75 per pound Direct-material quantity variance = (7800 - 8034) * $9.75 = $2,281.5 (unfavourable) Total Direct-material variance = Direct-material price variance + Direct-material quantity variance = $2,008.5 (unfavourable) + $2,281.5 (unfavourable) = $4,290 (unfavourable) 3. Direct Labor rate variance Direct Labor rate variance = (Standard rate - Actual rate) * Actual hours worked Actual hours worked = 1920 Standard rate = $13.80 per hour Actual rate = $14.21 per hour Direct Labor rate variance = ($13.80 - $14,21) * 1920 = $787.2 (unfavourable) Direct Labor efficiency variance Direct Labor efficiency variance = (Standard hours for actual output - Actual hours worked)* Standard rate Where, Standard hours for actual output = (0.3*6000) = 1800 Actual hours worked = 1920 Standard rate = $13.80 per hour Labor efficiency variance = (1800 - 1920) * $13.80 = $1,656 (unfavourable) Total Labor variance = Direct Labor rate variance + Direct Labor efficiency variance = $787.2 (unfavourable) + $1,656 (unfavourable) = $2,443.2 (unfavourable)

Answered: Direct Materials and Direct Labor…

Business

Accounting

Direct Materials and Direct Labor Variance Analysis

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Question

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 60 employees. Each employee presently provides 32 hours of labor per week. Information about a
production week is as follows:
Standard wage per hour
$13.80
Standard labor time per unit
20 min.
Standard number of Ibs. of brass
1.3 lbs.
Standard price per Ib. of brass
$9.75
Actual price per lb. of brass
$10.00
Actual Ibs. of brass used during the week
8,034 lbs.
Number of units produced during the week
6,000
Actual wage per hour
$14.21
Actual hours for the week (60 employees x 32 hours)
1,920
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
Direct labor standard cost per unit
Total standard cost per unit
%24
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
Direct Materials Quantity Variance
Total Direct Materials Cost Variance
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 unfayorable variance as a positive number.
Direct Labor Rate Variance
Direct Labor Time Variance
Total Direct Labor Cost Variance

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