Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing. Eac 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 Standard Labor Time Product Alpha6 Zeta7 X442 Y661 2.0 kilos 3.0 liters 5.0 kilos 4.0 liters Sintering Finishing 0.20 hours 0.40 hours 0.90 hours 1.00 hours Information relating to materials purchased and materials used in production during May follows: Material X442 Y661 Purchases 15,500 kilos Purchase Cost $ 48,050 16,500 liters $ 29,700 Standard Price $ 2.90 per kilo $ 1.90 per liter Used in Production 10,000 kilos 14,500 liters The following additional Information is available: a. The company recognizes price variances when materials are purchased. b. The standard labor rate is $22.00 per hour in Sintering and $20.50 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 3,000 direct labor-hours were worked in Finishing at a total labor cost of $67,500. d. Production during May was 2100 Alpha6s and 1,220 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. Eac 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 Standard Labor Time Product Alpha6 Zeta7 X442 Y661 2.0 kilos 3.0 liters 5.0 kilos 4.0 liters Sintering Finishing 0.20 hours 0.40 hours 0.90 hours 1.00 hours Information relating to materials purchased and materials used in production during May follows: Material X442 Y661 Purchases 15,500 kilos Purchase Cost $ 48,050 16,500 liters $ 29,700 Standard Price $ 2.90 per kilo $ 1.90 per liter Used in Production 10,000 kilos 14,500 liters The following additional Information is available: a. The company recognizes price variances when materials are purchased. b. The standard labor rate is $22.00 per hour in Sintering and $20.50 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 3,000 direct labor-hours were worked in Finishing at a total labor cost of $67,500. d. Production during May was 2100 Alpha6s and 1,220 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
2.0 kilos
Y661
3.0 liters
Standard Labor Time
Sintering
0.20 hours
Finishing
0.90 hours
0.40 hours
5.0 kilos 4.0 liters
1.00 hours
Information relating to materials purchased and materials used in production during May follows:
Material
X442
Y661
Purchases
15,500 kilos
Purchase Cost
Standard Price
Used in Production
$ 48,050
$ 2.90 per kilo
16,500 liters
$ 29,700
$ 1.90 per liter
10,000 kilos
14,500 liters
The following additional Information is available:
a. The company recognizes price variances when materials are purchased.
b. The standard labor rate is $22.00 per hour in Sintering and $20.50 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 3,000 direct labor-hours were
worked in Finishing at a total labor cost of $67,500.
d. Production during May was 2,100 Alpha6s and 1,220 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.
Complete this question by entering your answers in the tabs below.
Req 1
Req 2
Req 3
Compute the materials price and quantity variances for each material. (Indicate the effect of each variance by selecting "F" for
favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
Direct Materials Variances-Material X442:
Materials price variance
3,100 U
F
Direct Materials Variances-Material Y881:
Materials quantity variance
Materials price variance
Materials quantity variance
1,850 F
U
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