Sharp Company manufactures a product for which the following standards have been set: Standard Quantity or Hours 3 feet ? hours Direct materials Direct labor During March, the company purchased direct materials at a cost of $64,440, all of which were used in the production of 3,500 units of product. In addition, 5,000 direct labor-hours were worked on the product during the month. The cost of this labor time was $47,500. The following variances have been computed for the month: Materials quantity variance. Labor spending variance Labor efficiency variance. Reg 1A Actual cost Req 1A Req 1B For direct materials, compute the actual cost per foot of materials for March. (Round your answer to 2 decimal places.) per foot Price variance Spending variance Req 1A Req 1B Req 2 Req 1B Standard Price or Rate Standard Cost $5 per foot $ 15 ? per hour. Req 2 For direct materials, compute the price variance and the spending variance. (Do not round intermediate calculations. 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.) $ 1,200 U $3,400 U $900 U Reg 2 2a. For direct labor, compute the standard direct labor rate per hour. (Round your answer to the nearest whole dollar.) 2b. For direct labor, compute the standard hours allowed for the month's production. (Do not round your intermediate value.) 2c. For direct labor, compute the standard hours allowed per unit of product. (Round your answer to 1 decimal place.) 2a. Standard direct labor rate per hour 2b. Standard hours allowed for the month's production 2c. Standard hours allowed per unit of product
Sharp Company manufactures a product for which the following standards have been set: Standard Quantity or Hours 3 feet ? hours Direct materials Direct labor During March, the company purchased direct materials at a cost of $64,440, all of which were used in the production of 3,500 units of product. In addition, 5,000 direct labor-hours were worked on the product during the month. The cost of this labor time was $47,500. The following variances have been computed for the month: Materials quantity variance. Labor spending variance Labor efficiency variance. Reg 1A Actual cost Req 1A Req 1B For direct materials, compute the actual cost per foot of materials for March. (Round your answer to 2 decimal places.) per foot Price variance Spending variance Req 1A Req 1B Req 2 Req 1B Standard Price or Rate Standard Cost $5 per foot $ 15 ? per hour. Req 2 For direct materials, compute the price variance and the spending variance. (Do not round intermediate calculations. 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.) $ 1,200 U $3,400 U $900 U Reg 2 2a. For direct labor, compute the standard direct labor rate per hour. (Round your answer to the nearest whole dollar.) 2b. For direct labor, compute the standard hours allowed for the month's production. (Do not round your intermediate value.) 2c. For direct labor, compute the standard hours allowed per unit of product. (Round your answer to 1 decimal place.) 2a. Standard direct labor rate per hour 2b. Standard hours allowed for the month's production 2c. Standard hours allowed per unit of product
Chapter1: Financial Statements And Business Decisions
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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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Transcribed Image Text:Sharp Company manufactures a product for which the following standards have been set:
Standard Quantity or
Hours
3 feet
? hours
Direct materials
Direct labor
During March, the company purchased direct materials at a cost of $64,440, all of which were used in the production of 3,500 units of
product. In addition, 5,000 direct labor-hours were worked on the product during the month. The cost of this labor time was $47,500.
The following variances have been computed for the month:
Materials quantity variance
Labor spending variance
Labor efficiency variance
Req 1A
Actual cost
Req 1A
Req 1B
For direct materials, compute the actual cost per foot of materials for March. (Round your answer to 2 decimal places.)
per foot
Price variance
Spending variance
Req 1A
Reg 1B
Req 2
Req 1B
Standard Price or Rate Standard Cost
$5 per foot
$15
? per hour
?
Req 2
For direct materials, compute the price variance and the spending variance. (Do not round intermediate calculations. 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.)
$ 1,200 U
$ 3,400 U
$ 900 U
Req 2
2a. For direct labor, compute the standard direct labor rate per hour. (Round your answer to the nearest whole dollar.)
2b. For direct labor, compute the standard hours allowed for the month's production. (Do not round your intermediate value.)
2c. For direct labor, compute the standard hours allowed per unit of product. (Round your answer to 1 decimal place.)
2a. Standard direct labor rate per hour
2b. Standard hours allowed for the month's production
2c. Standard hours allowed per unit of product
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