Zeke's Bikes uses a standard cost system and provides the following information: Standards: 3 lbs of material per unit at a cost of $1.15 per pound. 2 direct labor hours per unit costing $11.25 per hour. Actual: 2,500 lbs of material were purchased at a cost of $1.20 per pound. Employees worked 1,800 hours and were paid $10.75 per hour. Zeke's Bikes produced a 1,000 bikes this period. 1. Calculate the direct materials cost variance and the direct materials efficiency variance.
Zeke's Bikes uses a standard cost system and provides the following information: Standards: 3 lbs of material per unit at a cost of $1.15 per pound. 2 direct labor hours per unit costing $11.25 per hour. Actual: 2,500 lbs of material were purchased at a cost of $1.20 per pound. Employees worked 1,800 hours and were paid $10.75 per hour. Zeke's Bikes produced a 1,000 bikes this period. 1. Calculate the direct materials cost variance and the direct materials efficiency variance.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Zeke's Bikes uses a standard cost system and provides the following information:
Standards:
| 3 lbs of material per unit at a cost of $1.15 per pound. |
|---|
| 2 direct labor hours per unit costing $11.25 per hour. |
Actual:
| 2,500 lbs of material were purchased at a cost of $1.20 per pound. |
|---|
| Employees worked 1,800 hours and were paid $10.75 per hour. |
Zeke's Bikes produced a 1,000 bikes this period.
1. Calculate the direct materials cost variance and the direct materials efficiency variance.
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2. Calculate the direct labor cost variance and the direct labor efficiency variance.
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Direct
Materials
Cost
Variance
Direct
Materials
Efficiency
Variance
=
=
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Direct
Labor
Cost
Variance
Favorable or
Unfavorable
Direct
Labor
Efficiency
Variance
Favorable or
Unfavorable
Favorable or
Unfavorable
Favorable or
Unfavorable
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