Question

Required information (The following information applies to the questions displayed below.) A manufactured product has the following information for June. Standard (7 lbs. e $7 per lb.) (2 hrs. e $16 per hr.) (2 hrs. e S$12 per hr.) Actual Direct materials Direct labor Overhead 51, 600 lbs. e S7.10 per 1b. 14, 200 hrs.e S16.50 per hr. S180, 400 7, 300 Units manufactured (1) Compute the standard cost per unit. Direct materials Direct labor Overhead Total (2) Compute the total cost variance for June, Indicate whether the cost variance is favorable or unfavorable. Total cost variance

Answer 1

1.

Direct materials (7*$7)	$49
Direct labor (2*$16)	32
Overhead (2*$12)	24
Total	$105

2.

Total cost variance = Actual cost - Standard cost

Total cost variance = (51,600*$7.10+14,200*$16.50+$180,400) - 7,300*$105

Total cost variance = $(366,360+234,300+180,400) - $766,500

Total cost variance = $781,060 - 766,500 = $14,560 Unfavorable

3.

Actual cost								Standard cost
Actual quantity	$\times$	Actual price		Actual quantity	$\times$	Standard price		Standard quantity	$\times$	Standard price
51,600	$\times$	$7.10		51,600	$\times$	$7		51,100 (7,300*7)	$\times$	$7
	$366,360				$361,200				$357,700
Direct material price variance = $5,160 Unfavorable
Direct material quantity variance = $3,500 Unfavorable
Direct material cost variance = $8,660 Unfavorable

4.

Actual cost								Standard cost
Actual hours	$\times$	Actual rate		Actual hours	$\times$	Standard rate		Standard hours	$\times$	Standard rate
14,200	$\times$	$16.50		14,200	$\times$	$16		14,600 (7,300*2)	$\times$	$16
	$234,300				$227,200				$233,600
Direct labor rate variance = $7,100 Unfavorable
Direct labor efficiency variance = $6,400 Favorable
Direct labor cost variance = $700 Unfavorable