Chapter 10, Problem 10.11P

1

To determine

For direct material compute actual cost per foot and price variance and spending variance.

Introduction: Standard costing means the accounting system which is used by manufacturers mainly to identify variances or difference that occur in cost. The difference is identified between actual cost of goods that were manufactured and those cost which should have occurred when actual goods were manufactured.

2

To determine

For direct labor compute standard direct labor per hour, standard hours allowed for the month’s production, and standard hours allowed per unit of product.

Introduction: Standard costing means the accounting system which is used by manufacturers mainly to identify variances or difference that occur in cost. The difference is identified between actual cost of goods that were manufactured and those cost which should have occurred when actual goods were manufactured.

Labor rate per hour is $20, standard labor hour allowed is 2,900 hour, and standard labor hour allowed per unit is 0.90 per unit.

1.   $\begin{array}{l}Laborrateperhour=\frac{\left(\begin{array}{l}Actuallaborhour\\ \times \left(\frac{Costoflabor}{Actuallaborhour}\right)\\ +\left(\begin{array}{l}Laborspending\mathrm{var}iance\\ +Laborefficiency\mathrm{var}iance\end{array}\right)\end{array}\right)}{Totalactuallaborhour}\\ Laborrateperhour=\frac{\left(\begin{array}{l}4,900\times \left(\frac{95,550}{4,900}\right)\\ +\left(450+2,000\right)\end{array}\right)}{4,900}\\ Laborrateperhour=\frac{95,550+2,450}{4,900}\\ Laborrateperhour=\$20\end{array}$
2.   $\begin{array}{l}S\tan dardlaborhourallowed=\frac{\left(\begin{array}{l}Laborrate\mathrm{var}ianceperhour\times \\ Totalactuallaborhour-\\ Laborefficiency\mathrm{var}iance\end{array}\right)}{Laborrate\mathrm{var}ianceperhour}\\ S\tan dardlaborhourallowed=\frac{20\times (4,900-2,000)}{20}\\ S\tan dardlaborhourallowed=2,900hour\end{array}$
3.   $\begin{array}{l}S\tan dardlaborhourallowedperunit=\frac{S\tan dardlaborhourallowed}{Totalproduction}\\ S\tan dardlaborhourallowedperunit=\frac{2,900}{3,200}\\ S\tan dardlaborhourallowedperunit=0.90perunit\end{array}$