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 Y661 X442 1.5 kilos 2.2 liters 3.5 kilos. 4.4 liters Standard Labor Time Finishing Sintering 0.40 hours 0.80 hours 0.30 hours 0.90 hours Product Alpha6 Zeta7 Information relating to materials purchased and materials used in production during May follows: Material Purchases 14,100 kilos 15,100 liters Purchase Cost $ 53,580 X442 Standard Price $ 3.60 per kilo $ 1.50 per liter Used in Production 8,600 kilos 13,100 liters Y661 $ 21,140 The following additional information is available: a. The company recognizes price variances when materials are purchased. b. The standard labor rate is $18.00 per hour in Sintering and $18.00 per hour in Finishing. c. During May, 1,250 direct labor-hours were worked in Sintering at a total labor cost of $28,250, and 2,860 direct labor-hours were worked in Finishing at a total labor cost of $57,200. d. Production during May was 1,600 Alpha6s and 1,800 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 Y661 X442 1.5 kilos 2.2 liters 3.5 kilos. 4.4 liters Standard Labor Time Finishing Sintering 0.40 hours 0.80 hours 0.30 hours 0.90 hours Product Alpha6 Zeta7 Information relating to materials purchased and materials used in production during May follows: Material Purchases 14,100 kilos 15,100 liters Purchase Cost $ 53,580 X442 Standard Price $ 3.60 per kilo $ 1.50 per liter Used in Production 8,600 kilos 13,100 liters Y661 $ 21,140 The following additional information is available: a. The company recognizes price variances when materials are purchased. b. The standard labor rate is $18.00 per hour in Sintering and $18.00 per hour in Finishing. c. During May, 1,250 direct labor-hours were worked in Sintering at a total labor cost of $28,250, and 2,860 direct labor-hours were worked in Finishing at a total labor cost of $57,200. d. Production during May was 1,600 Alpha6s and 1,800 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):
Standard Labor Time
Sintering Finishing
0.40 hours 0.80 hours
0.30 hours 0.90 hours
Information relating to materials purchased and materials used in production during May follows:
Material
Standard Price
$ 3.60 per kilo
X442
Used in Production
8,600 kilos
13,100 liters
Y661
$ 1.50 per liter
Product
Alpha6
Zeta7
Raw Material
Y661
X442
1.5 kilos
3.5 kilos 4.4 liters
2.2 liters
Purchases
14,100 kilos
15,100 liters
Purchase Cost
$ 53,580
$ 21,140
The following additional information is available:
a. The company recognizes price variances when materials are purchased.
b. The standard labor rate is $18.00 per hour in Sintering and $18.00 per hour in Finishing.
c. During May, 1,250 direct labor-hours were worked in Sintering at a total labor cost of $28,250, and 2,860 direct labor-hours were
worked in Finishing at a total labor cost of $57,200.
d. Production during May was 1,600 Alpha6s and 1,800 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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