Question

Abbeville Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 90 employees. Each employee presently provides 36 hours of labor per week. Information about a production week is as follows:

Standard wage per hr. Standard labor time per faucet Standard number of lb. of brass Standard price per lb. of brass Actual price per lb. of brass Actual lb. of brass used during the week Number of faucets produced during the week Actual wage per hr. Actual hrs. for the week

$15.00 40 min. 3 lb. $2.40 $2.50 14,350 lb. 4,800 $14.40 3,240 hrs.

Instructions

Determine (a) the standard cost per unit for direct materials and direct labor; (b) the di- rect materials price variance, direct materials quantity variance, and total direct materials cost variance; and (c) the direct labor rate variance, direct labor time variance, and total direct labor cost variance.

Answer 1

a	SC per unit for direct materials:
	Standard unit	3 Lbs.
	Standard price	$ 2.40
	Standard cost	7.2
	SC per unit for DL
	SL time per faucet (Hours) = 40/60	0.666667	Hours
	SW per hour.	$ 15
	SC per unit for DL	$ 10
b	DMPV = (AP - SP)* AQ
	AP	$ 2.50
	SP	$ 2.40
	AQ	14350
	Direct materials price variance ((2.5-2.4)*14350)	1435	Unfavorable
	DMQV = (AQ - SQ)* SP
	Actual Quantity	14350
	SQ = Number of faucets produced * Standard number of lbs. of brass (4800*3)	14400
	Standard Price	$ 2.40
	DMQV ((14350-14400)*2.4)	-120	Favorable
	Total DMCV:
	DMPV	1435	Unfavorable
	DMQV	120	Favorable
	Total DMCV:	1315	Unfavorable
c	Direct labor rate variance: (SR - AR)* AH = ($15 - $14.40) * 3240	1944	Favorable
	Direct labor time variance: (SH - AH) * SR = (3200 - 3240) * 15	600	Unfavorable
	Total direct labor cost variance: Labor rate variance + Labor time variance = $1,944 (F) + $600 (U)	1344	Favorable