Chapter 8, Problem 11P

Analyses of materials and labor variances

On May 1, Athens Inc. began the manufacture of a new mechanical device known as Snap. The company installed a standard cost system in accounting for manufacturing costs. The standard direct materials and labor costs for a unit of Snap follow:

The following data came from Athens’ records for May:

The amount shown above for the materials price variance is applicable to raw materials purchased during May.

Required:

Compute each of the following items for Athens for May. Show computations in good form.

1. 1. Standard quantity of raw materials allowed (in pounds) for actual production.
2. 2. Actual quantity of raw materials used (in pounds). (Hint: Be sure to consider the materials quantity variance.)
3. 3. Standard direct labor hours allowed.
4. 4. Actual direct labor hours worked. (Hint: Be sure to consider the direct labor efficiency variance.)
5. 5. Actual direct labor rate. (Hint: Be sure to consider the direct labor rate variance.)