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 40 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 Actual lbs. 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 OBJ. 3, 4 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 $16,680 variable cost Fixed cost, $4.00 $12,800 fixed 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 (c) the variable factory overhead controllable variance, fixed factory overhead volume variance, and total factory overhead cost variance.

Answer 1

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Part a

Standard quantity in lb of brass per unit	5
Multiply: Standard price per lb of brass	$         2.80
Direct material cost per unit	$       14.00
Standard hours per unit (20 Minutes = 20/60 = 0.3333333 hours)	0.333333
Multiply: Standard rate per hour	$       21.00
Direct labor cost per unit	$         7.00

Part b and c

Summary of Answer
Material
Material price variance	4,790	Favorable
Material quantity variance	2,170	Unfavorable
Total material cost variance	2,620	Favorable
Labor
Labor rate variance	1,600	Unfavorable
Labor time variance	1,260	Unfavorable
Total labor cost variance	2,860	Unfavorable

	Minus sign indicate Favorable variance.
	Measure	Pound
	Standard price per Pound	$            2.80
	Actual price per Pound	$            2.72
5*11820	Standard quantity in Pounds	59100
	Actual quantity purchased in Pounds	59875
	Actual quantity used in Pounds	59875
	Actual price per Pound	2.72
Less	Standard price per Pound	-2.80
	Difference	-0.08
Multiply	Actual quantity purchased in Pounds	59875
	Material price variance	$        (4,790)
	Indicate	Favorable
	Actual quantity used in Pounds	59875
Less	Standard quantity in Pounds	-59100
	Difference	775
Multiply	Standard price per Pound	2.80
	Material quantity variance	$          2,170
	Indicate	Unfavorable
	Total material cost variance (Total of both variance)	$        (2,620)
	Indicate	Favorable

	Minus sign indicate Favorable variance.
	Measure	Hour
	Standard rate per Hour	$            21.00
	Actual rate per Hour	$            21.40
11820*0.333333	Standard labor Hours	3940
	Actual labor Hours	4000
	Actual rate per Hour	21.40
Less	Standard rate per Hour	-21.00
	Difference	0.40
Multiply	Actual labor Hours	4000
	Labor rate variance	$            1,600
	Indicate	Unfavorable
	Actual labor Hours	4000
Less	Standard labor Hours	-3940
	Difference	60
Multiply	Standard rate per Hour	21.00
	Labor time variance	$            1,260
	Indicate	Unfavorable
	Total labor cost variance (Total of both variance)	$            2,860
	Indicate	Unfavorable