Question

Mickley Corporation produces two products, Alphabs and Zeta7s, which pass through two operations, Sintering and Finishing. Each of the products uses two raw materials-X442 and Y661. The company uses a standard cost system, with the following standards for each product on a per unit basis): Product Alpha 6 Zeta Raw Material X442 7661 3.0 kilos 2.0 liters 5.0 kilos 5,0 liters Standard Labor Time Sintering Finishing 0.40 hours 1.00 hours 0.50 hours 1.20 hours Information relating to materials purchased and materials used in production during May follows: Material X442 7661 Purchases 15.700 kilos 16,700 liters Purchase Costa $51.810 $20,040 Standard Price $3,10 per kilo $1.30 per liter Used in Production 10.200 kilos 14,700 liters The following additional information is available: a. The company recognizes price variances when materials are purchased. b. The standard labor rate is $23.00 per hour in Sintering and $21.50 per hour in Finishing c. During May. 1.450 direct labor-hours were worked in Sintering at a total labor cost of $35,090, and 3,020 direct labor-hours were worked in Finishing at a total labor cost of $70,970 d Production during May was 2,300 Alpha6s and 700 Zeta7s, Required: 1. Complete the standard cost card for each product, showing the standard cost of direct materials and direct labor 2. Compute the materials price and quantity variances for each material. 3. Compute the labor rate and efficiency variances for each operation

Answer 1

1		Rate perunit	Alpha6	Zeta7
	X442	3.1	9.3	15.5
	Y661	1.3	2.6	6.5
	Sintering	23	9.2	11.5
	Finishing	21.5	21.5	25.8
	Standard cost		42.6	59.3
2			X442	Y661
	MPV = (SP-AP)XAQ
		AP	3.3	1.2
		SP	3.1	1.3
		AQ	10200	14700
		MPV	-2040	1470
	MQV = SP X (SQ-AQ)
		SQ	15700	16700
		AQ	10200	14700
		SP	3.1	1.3
		MQV	17050	2600
3
			Sintering	Finishing
	LRV = (SR-AR) x AH
		SR	23	21.5
		AR	24.2	23.5
		AH	1270	3140
		LRV	-1524	-6280
			Sintering	Finishing
	LEV = AHxSR - SHxSR
		SR	23	21.5
		SH	1450	3020
		AH	1270	3140
		LEV	-4140	2580