Question

In-process beginning inventory In-process ending inventory Units completed Budgeted output Purchases of materials Total actual direct labor costs Actual direct labor hours Materials usage variance Total materials variance None 700 units, 70% complete as to direct labor 6,200 units 6,6ee units 56,000 kilograms $ 668,000 39,200 hours 2,100 Unfavorable 700 Unfavorable Required: 1. Compute for November: a. The direct labor efficiency variance. Is this variance favorable (F) or unfavorable (U)? b. The direct labor rate variance. Is this variance favorable (F) or unfavorable (U)? c. The actual number of kilograms of material used in the production process during the month d. The actual price paid per kilogram of material during the month, the company calculates the direct materials price variance at point of purchase. e. The amount of direct materials cost and direct labor cost transferred to the Finished Goods Inventory account. f. The total amount of direct materials cost and direct labor cost in the Work-in-Process Inventory account at the end of the month. 2. Prepare journal entries to record all transactions, including the variances in requirement 1. Prev 1 of 2 !!! Next >

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Answer 1

a. Calculation of Direct Labor efficiency variance:

Direct labor efficiency variance = (Actual hours worked × Standard rate) – (Standard hours allowed × Standard rate)

= (39200 hrs * $19) - ((6*6200) hrs * $19) = (744800 - 706800) = $38000 unfavorable

b. Calculation of Direct Labor Rate variance:

Direct labor rate variance = (Actual hours worked × Actual rate) – (Actual hours worked × Standard rate)

= ($660000) - (39200 * $19) = $ - 84800 Favorable

c. Calculation of actual number of kilogram material used

Direct material usage variance = (Actual quantity used × Standard cost) – (Standard quantity allowed for actual output × Standard cost)

$2100 = (Actual Qty * $6) - (31000 * $6) = 30650 Kilograms