Question

Direct Materials and Direct Labor Variance Analysis Shasta Fixture Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 70 employees. Each employee presently provides 32 hours of labor per week. Information about a production week is as follows: $12.60 Standard wage per hour Standard labor time per unit 20 min. Standard number of lbs. of brass 1.5 lbs. Standard price per Ib. of brass $12.75 Actual price per lb. of brass $13.00 Actual lbs. of brass used during the week Number of units produced during the week 13,905 lbs. 9,000 $12.98 2,240 Actual wage per hour Actual hours for the week (70 employees x 32 hours) Required: a. Determine the standard cost per unit for direct materials and direct labor. Round the cost per unit to two decimal places. Direct materials standard cost per unit Direct labor standard cost per unit जी ी ी Total standard cost per unit

Answer 1

a.	Standard labor time per unit in hours = 20 / 60 = 1 / 3 hours
	Direct materials standard cost per unit ( Standard number of lbs. of brass * Standard price per lb. of brass = 1.5 * 12.75 )	19.13
	Direct labor standard cost per unit ( Standard labor time per unit in hours * Standard wage per hour = (1/3) * 12.60 )	4.20
	Total standard cost per unit	23.33

b.	Direct materials price variance = ( Actual price - Standard price ) * Actual quantity = ( 13.00 -12.75 ) * 13905	3476	Unfavorable
	Standard quantity of direct materials for actual production = Number of units produced during the week * Standard number of lbs. of brass = 9000 * 1.5	13500
	Direct materials quantity variance = ( Actual quantity - Standard quantity ) * Standard price = ( 13905 - 13500 ) * 12.75	5164	Unfavorable
	Total direct materials cost variance = ( Actual quantity * Actual price ) - ( Standard quantity * Standard price ) = ( 13905 * 13.00 ) - ( 13500 * 12.75 )	8640	Unfavorable

c.	Direct labor rate variance = ( Actual rate - Standard rate ) * Actual hours = ( 12.98 - 12.60 ) * 2240	851	Unfavorable
	Standard hours for actual production = Number of units produced during the week * Standard labor hours per unit = 9000 * (1/3)	3000
	Direct labor time variance = ( Actual hours - Standard hours ) * Standard rate = ( 2240 - 3000 ) * 12.60	-9576	Favorable
	Total direct labor cost variance = ( Actual hours * Actual rate ) - ( Standard hours * Standard rate ) = ( 2240 * 12.98 ) - ( 3000 * 12.60 )	-8725	Favorable