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Sharp Company manufactures a product for which the following standards have been set: Standard Quantity or Hours 3 feet 7 hours Standard Price Standard or Rate Cost $5 per foot 15 ? per hour Direct materials Direct labor During March, the company purchased direct materials at a cost of $45,180, all of which were used in the production of 2.290 units of product. In addition, 4,700 direct labor hours were worked on the product during the month. The cost of this labor time was $32.900. The following variances have been computed for the month: Materials quantity variance Labor spending variance Labor efficiency variance $ $ $ 3,309 U 3,130 U 780 U Required: 1. For direct materials: a. Compute the actual cost per foot of materials for March b. Compute the price variance and the spending variance. 2. For direct labor a. Compute the standard direct labor rate per hour. b. Compute the standard hours allowed for the month's production C. Compute the standard hours allowed per unit of product.

Answer 1

	Materials Quantity variance
	(AQ used - Std Qty allowed)*SR
	(x - 2290*3)*5 =3300U
	5x - 34350 = 3300U
	x	=(3300+34250)/5
		7530
a)	actual cost =		45180/7530
			6	per foot	answer
(
b)	Materials price variance
	(Actual rate - standard rate)*AQ purchased
	(6 - 5)*7530
	7530	U	answer
	Spending variance =		3300U+7530U
			10830	U	answer
2a)	labor spending varian				3,130	U
	labor efficiency varian				780	U
	labor price variance				2350	U
	labor rate variance = ( Actual rate - standard rate)*Actual hours
			(32900 - 4700*x)		=	2,350
			x =	(32900-2350)/4700
				6.5
	Standard hours		6.5	per hour
b)	Standard hours =
	labor efficiency variance
	(Actual hours - standard hours allowed)*Standard rate
	(4700 -x ) *6.5 = 780
	30550 - 6.5x = 780
	x                       = (30550-780)/6.5
		4580
	Standard hours allowed			4,580	hours
c)	Standard hours allowed per unit of product
	4580/2290
	2
	Standard hours allowed per unit of product				2	hours per unit