ped for a line of trumpets: Standard Input Expected for Each of Output Achiew 5 pounds
ped for a line of trumpets: Standard Input Expected for Each of Output Achiew 5 pounds
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![### Direct-Material and Direct-Labor Variances
Hill Fine Instruments manufactures trumpets, trombones, tubas, and other brass instruments. The following standards were developed for a line of trumpets:
| Standard Inputs Expected for Each Unit of Output Achieved | Standard Price per Unit of Input |
|------------------------------------------------------------|----------------------------------|
| Direct materials | 5 pounds | $10 per pound |
| Direct labor | 10 hours | $25 per hour |
During April, Hill scheduled 550 trumpets for production. However, the company produced only 525.
Hill purchased and used 3,100 pounds of direct materials at a unit price of $9.00 per pound. It used 5,500 hours of direct labor at an actual rate of $26.00 per hour.
#### Problems to solve:
1. Compute the standard cost per trumpet for direct materials and direct labor.
2. Compute the price variances and quantity variances for direct materials and direct labor.
3. Based on these sketchy data, what clues for investigation are provided by the variances?
Let's break down the problem further:
### 1. Standard Cost Calculation
**Direct Materials:**
Standard input required for one unit of output = 5 pounds.
Standard price per pound = $10.
Standard cost per unit = 5 pounds * $10/pound = $50.
**Direct Labor:**
Standard input required for one unit of output = 10 hours.
Standard price per hour = $25.
Standard cost per unit = 10 hours * $25/hour = $250.
**Total standard cost per trumpet** = $50 (Materials) + $250 (Labor) = $300.
### 2. Price and Quantity Variances
**Direct Material Variances:**
- **Material Price Variance (MPV):**
\[
\text{MPV} = (\text{Actual Price} - \text{Standard Price}) \times \text{Actual Quantity}
\]
\[
\text{MPV} = ($9 - $10) \times 3100 = -$3,100 \text{ (Favorable)}
\]
- **Material Quantity Variance (MQV):**
\[
\text{MQV} = (\text{Actual Quantity} - \text{Standard Quantity}) \times \text{Standard Price}
\]
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Transcribed Image Text:### Direct-Material and Direct-Labor Variances
Hill Fine Instruments manufactures trumpets, trombones, tubas, and other brass instruments. The following standards were developed for a line of trumpets:
| Standard Inputs Expected for Each Unit of Output Achieved | Standard Price per Unit of Input |
|------------------------------------------------------------|----------------------------------|
| Direct materials | 5 pounds | $10 per pound |
| Direct labor | 10 hours | $25 per hour |
During April, Hill scheduled 550 trumpets for production. However, the company produced only 525.
Hill purchased and used 3,100 pounds of direct materials at a unit price of $9.00 per pound. It used 5,500 hours of direct labor at an actual rate of $26.00 per hour.
#### Problems to solve:
1. Compute the standard cost per trumpet for direct materials and direct labor.
2. Compute the price variances and quantity variances for direct materials and direct labor.
3. Based on these sketchy data, what clues for investigation are provided by the variances?
Let's break down the problem further:
### 1. Standard Cost Calculation
**Direct Materials:**
Standard input required for one unit of output = 5 pounds.
Standard price per pound = $10.
Standard cost per unit = 5 pounds * $10/pound = $50.
**Direct Labor:**
Standard input required for one unit of output = 10 hours.
Standard price per hour = $25.
Standard cost per unit = 10 hours * $25/hour = $250.
**Total standard cost per trumpet** = $50 (Materials) + $250 (Labor) = $300.
### 2. Price and Quantity Variances
**Direct Material Variances:**
- **Material Price Variance (MPV):**
\[
\text{MPV} = (\text{Actual Price} - \text{Standard Price}) \times \text{Actual Quantity}
\]
\[
\text{MPV} = ($9 - $10) \times 3100 = -$3,100 \text{ (Favorable)}
\]
- **Material Quantity Variance (MQV):**
\[
\text{MQV} = (\text{Actual Quantity} - \text{Standard Quantity}) \times \text{Standard Price}
\]
\[
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