Sharp Company manufactures a product for which the following standards have been set: Direct materials Direct labor Standard Quantity or Standard Price Standard Hours or Rate $5 per foot ? per hour Cost $ 15 3 feet ? hours. ? During March, the company purchased direct materials at a cost of $53,730, all of which were used in the production of 2,875 units product. In addition, 4,700 direct labor-hours were worked on the product during the month. The cost of this labor time was $37,600. The following variances have been computed for the month: Materials quantity variance Labor spending variance Labor efficiency variance $1,650 U $ 3,100 U $ 750 U Required: 1. For direct materials: a. Compute the actual cost per foot of materials for March. b. Compute the price variance and the spending variance. 2. For direct labor: a. Compute the standard direct labor rate per hour. b. Compute the standard hours allowed for the month's production. c. Compute the standard hours allowed per unit of product.

Sharp Company manufactures a product for which the following standards have been set: Direct materials Direct labor Standard Quantity or Standard Price Standard Hours or Rate $5 per foot ? per hour Cost $ 15 3 feet ? hours. ? During March, the company purchased direct materials at a cost of $53,730, all of which were used in the production of 2,875 units product. In addition, 4,700 direct labor-hours were worked on the product during the month. The cost of this labor time was $37,600. The following variances have been computed for the month: Materials quantity variance Labor spending variance Labor efficiency variance $1,650 U $ 3,100 U $ 750 U Required: 1. For direct materials: a. Compute the actual cost per foot of materials for March. b. Compute the price variance and the spending variance. 2. For direct labor: a. Compute the standard direct labor rate per hour. b. Compute the standard hours allowed for the month's production. c. Compute the standard hours allowed per unit of product.

Name: Sharp Company manufactures a product for which the following standard
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Description: Sharp Company manufactures a product for which the following standards have been set:StandardQuantity orHours3 feet? hoursDirect materialsDirect laborStandard Price Standardor RateCost$ 15?Materials quantity varianceLabor spending varianceLabor effi

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.

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Question

Sharp Company manufactures a product for which the following standards have been set:
Standard
Quantity or
Hours
3 feet
? hours
Direct materials
Direct labor
Standard Price Standard
or Rate
Cost
$ 15
?
Materials quantity variance
Labor spending variance
Labor efficiency variance
$5 per foot
? per hour
During March, the company purchased direct materials at a cost of $53,730, all of which were used in the production of 2,875 units of
product. In addition, 4,700 direct labor-hours were worked on the product during the month. The cost of this labor time was $37,600.
The following variances have been computed for the month:
$ 1,650 U
$ 3,100 U
$ 750 U
Required:
1. For direct materials:
a. Compute the actual cost per foot of materials for March.
b. Compute the price variance and the spending variance.
2. For direct labor:
a. Compute the standard direct labor rate per hour.
b. Compute the standard hours allowed for the month's production.
c. Compute the standard hours allowed per unit of product.

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