Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing. Each of the products uses two raw materials-X442 and Y661. The company uses a standard cost system, with the following standards for each product (on a per unit basis): Raw Material Product Alpha6 Zeta7 X442 2.5 kilos Y661 2.5 liters 4.5 kilos 5.0 liters Standard Labor Time Sintering 0.10 hours 0.30 hours Finishing 1.00 hours 1.20 hours Information relating to materials purchased and materials used in production during May follows: Material X442 Y661 Purchases 15,200 kilos 16,200 liters Purchase Cost $ 42,560 Standard Price $ 2.60 per kilo Used in Production $ 24,300 $ 1.60 per liter 9,700 kilos 14,200 liters The following additional information is available: a. The company recognizes price variances when materials are purchased. b. The standard labor rate is $23.00 per hour in Sintering and $21.00 per hour in Finishing. c. During May, 1,320 direct labor-hours were worked in Sintering at a total labor cost of $31,680, and 2,970 direct labor-hours were worked in Finishing at a total labor cost of $68,310. d. Production during May was 1,800 Alpha6s and 1,200 Zeta7s. Required: 1. Complete the standard cost card for each product, showing the standard cost of direct materials and direct labor. 2. Compute the materials price and quantity variances for each material. 3. Compute the labor rate and efficiency variances for each operation.
Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing. Each of the products uses two raw materials-X442 and Y661. The company uses a standard cost system, with the following standards for each product (on a per unit basis): Raw Material Product Alpha6 Zeta7 X442 2.5 kilos Y661 2.5 liters 4.5 kilos 5.0 liters Standard Labor Time Sintering 0.10 hours 0.30 hours Finishing 1.00 hours 1.20 hours Information relating to materials purchased and materials used in production during May follows: Material X442 Y661 Purchases 15,200 kilos 16,200 liters Purchase Cost $ 42,560 Standard Price $ 2.60 per kilo Used in Production $ 24,300 $ 1.60 per liter 9,700 kilos 14,200 liters The following additional information is available: a. The company recognizes price variances when materials are purchased. b. The standard labor rate is $23.00 per hour in Sintering and $21.00 per hour in Finishing. c. During May, 1,320 direct labor-hours were worked in Sintering at a total labor cost of $31,680, and 2,970 direct labor-hours were worked in Finishing at a total labor cost of $68,310. d. Production during May was 1,800 Alpha6s and 1,200 Zeta7s. Required: 1. Complete the standard cost card for each product, showing the standard cost of direct materials and direct labor. 2. Compute the materials price and quantity variances for each material. 3. Compute the labor rate and efficiency variances for each operation.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing. Each of
the products uses two raw materials-X442 and Y661. The company uses a standard cost system, with the following standards for
each product (on a per unit basis):
Raw Material
Product
Alpha6
Zeta7
X442
2.5 kilos
4.5 kilos
Y661
2.5 liters
Standard Labor Time
Sintering
5.0 liters
0.10 hours
0.30 hours
Finishing
1.00 hours
1.20 hours
Information relating to materials purchased and materials used in production during May follows:
Material
X442
Y661
Purchases
Purchase Cost
15,200 kilos
16,200 liters
$ 42,560
$ 24,300
Standard Price
$ 2.60 per kilo
$ 1.60 per liter
Used in Production
9,700 kilos
14,200 liters
The following additional information is available:
a. The company recognizes price variances when materials are purchased.
b. The standard labor rate is $23.00 per hour in Sintering and $21.00 per hour in Finishing.
c. During May, 1,320 direct labor-hours were worked in Sintering at a total labor cost of $31,680, and 2,970 direct labor-hours were
worked in Finishing at a total labor cost of $68,310.
d. Production during May was 1,800 Alpha6s and 1,200 Zeta7s.
Required:
1. Complete the standard cost card for each product, showing the standard cost of direct materials and direct labor.
2. Compute the materials price and quantity variances for each material.
3. Compute the labor rate and efficiency variances for each operation.
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