Question

Sharp Company manufactures a product for which the following standards have been set: Direct materials Direct labor Standard Quantity Standard Price Standard or Hours or Rate Cost 3 feet $5 per foot $ 15 7 hours 7 per hour 2 During March, the company purchased direct materials at a cost of $60,885, all of which were used in the production of 3,500 units of product. In addition, 5,000 direct labor-hours were worked on the product during the month. The cost of this labor time was $42,500. The following variances have been computed for the month: Materials quantity variance Labor spending variance Labor efficiency variance $ 2,850 U $ 3,300 U $ 800 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. Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Reg 2 For direct materials, compute the actual cost per foot of materials for March. (Round your answer to 2 decimal places.) Actual cost $ 5.80 per foot ROQ 1A Reg 1B >

Answer 1

Solution Page! Requirement IA: Compute the actual cost per foot of materials Step! : Calculation of Actual Quantity of Materials Materials Quantity Variance Standard Quantity - Actual for Actual Output – $2,850 =((3feet x3,5cowits ) Autent Quantity -$2850=110,500 fart 1-1 Actual Quantity) - 570 =(10,500 fost con. Actual Quantity) Actual Quantity = 10,500 foot + 570 +570 foot Actual Quantity = 11,070 foot Main Step: Calculation of Actual last pea foot of materials Actual last per foot Actual last of Materials Actual Quantity of Materials Ausulity ) x Standard Price Jx65 $ 5 $60,885 5/11,070 fast $5.50 per foot N Answer I A. Actual Cost $5.50 per foot

(-) N Requirement IB Page ? Materials Price Variance (Standard Price (-) Actual Price ) X Actual Quantity ($5 $5.50) x 11,070 foot $5,535"U" Unfavorable Materials spending Variance = Materale Price Variance + Materials Quantity Variance 5535 "0" + $ 28So "0" $8385 "V" Unfauorable Answers IB Paice Variance $ 5,53510 Spending Variance $8,385 U Requirement 2 a : For direct labor, compute the standard direct labor rate per hour Step! Calculation of Labor Rate Variance Labor spending Variance = Labor Rate Variance & labor Variance ܘܘ Direct Materials Efficiency

Pake? or - $3300 = labor Pate Variance +(-$800) Labor Rate Variame $800 - $3,300 Labor Rate Variance - $2500 Labor Rate Variance = $2,500 "U" Unfauorable Main Step Cakulation of Standard Direct Labor Rate per hour Labor Rate Variance ull (Standard Rate (it) Actual Rate) x Actual labos Howrs perhour per hour - $2500 = (Standard Pate + $8.50 ) x 5000 hours Soo - $2500 (Standard Rate - $8.50) -$0.50 Standard Rate - $8.50 Standard Rate per hour $8.50 - $0.50 • $8 per hour (542 sooo hours = 5000 hours $8 Standard direct labor rate per hour =

the (-) Actual = ( X - $800 Requirement 2 B: For direct labor, compute Papel standard hours allowed for the month's production Labon Efferiency Variance Standard hours allowed Standard labor hours for month's production Rate per hour Standard Hours (~) 5000 hours) x as) X48 – $800 _ (Standard Hours 1-3 500olours) $8 -100 hours - Standard Hours N 5000 hours Standard hours = 5000 hours (-) 100 hours 4,900 hours Standard hours allowed for months production 4,900 hours Requirement 2c: for direct labor, compute the standard hours allowed per unit of product. Standard hours allowed Standard hours allowed for month's fer unit of product production Actual Output in units

Pages 4900 hours Standard hours allowed per unit of product 3500 units 104 hours Answers 2 Za. Standard direct labor rate per have 2 $8 14,900 hours Zb. Standard hours allowed for the marth's production 2c. Standard hours allowed per 1.4 hours writ of product