Question

Chapter 23 Homework PR 23-1A Direct materials and direct labor variance analysis OBJ. 2,3 Fancy Fixture Company manufactures faucets in a small manufacturing facility. The fau- cets are made from brass. Manufacturing has 100 employees. Each employee presently provides 10 hours of labor per week. Information about a production week is as follows: Standard wage per hr. $21.00 Standard labor time per faucet 20 min. Standard number of lbs. of brass 5 lbs. Standard price per lb. of brass $2.80 Actual price per lb. of brass $2.72 Actuallbs. of brass used during the week 59,875 lbs Number of faucets produced during the week 11,820 Actual wage per hr. $21.40 Actual hrs, for the week 4,000 hrs. Instructions Determine (a) the standard cost per unit for direct materials and direct labor; (b) the di- rect materials price variance, direct materials quantity variance, and total direct materials cost variance; and (c) the direct labor rate variance, direct labor time variance, and total direct labor cost variance. PR 23-3A Direct materials, direct labor, and factory overhead cost variance analysis Adamantane Inc. processes a base chemical into plastic, Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 15,000 units of product were as follows: Standard Costs Actual Costs Direct materials 5,000 lbs. at $50.00 4,950 lbs. at $50.60 Direct labor 3,000 hrs. at $25.00 2.945 hrs. at $25.60 Factory overhead Rates per direct labor hr, based on 100% of normal capacity of 3.200 direct labor hrs.: Variable cost, $5.50 516,680 variable cost Fixed cost, 54.00 $12,800 foxed cost Each unit requires 0.2 hour of direct labor. Instructions Determine (a) the direct materials price variance, direct materials quantity variance, and total direct materials cost variance; (b) the direct labor rate variance, direct labor time vari- ance, and total direct labor cost variance, and the variable factory overhead controllable variance, fixed factory overhead volume variance, and total factory overhead cost variance.

Answer 1

23-1A
(a)
Standard cost per unit for Direct Material = 5 x $2.80 = $14
Standard cost per unit for Direct Labor = 20/60 x $21 = $7

(b)
Direct Material Price Variance = (Actual Price - Standard Price) x Actual Quantity Purchased
= ($2.72-2.80) x 59875 = $4790 (F)

Direct Material Quantity Variance = (Actual Quantity used - Standard Quantity) x Standard Price
= (59875 - 11820 x 5) x $2.80 = $2170 (U)

Total Direct Material Variance = $4790-2170 = $2620 (F)

(c)
Direct Labor rate Variance = (Actual rate - Standard rate) x Actual hours
= ($21.40-21) x 4000 = $1600 (U)

Direct Labor time Variance = (Actual hours - Standard hours) x Standard rate
= (4000 - 11820 x 20/60) x $21 = $1260 (U)

Total Direct Labor Variance = $1600+1260 = $2860 (U)

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