Question

In: Accounting

1- Direct Materials Variances Silicone Engine Inc. produces wrist-worn tablet computers. The company uses Thin Film...

1-

Direct Materials Variances

Silicone Engine Inc. produces wrist-worn tablet computers. The company uses Thin Film Crystal (TFC) LCD displays for its products. Each tablet uses one display. The company produced 450 tablets during December. However, due to LCD defects, the company actually used 500 LCD displays during December. Each display has a standard cost of $6.00. LCD displays were purchased for December production at a cost of $3,150.

Determine the price variance, quantity variance, and total direct materials cost variance for December. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. And, enter your final variance amounts to the nearest whole dollar.

Price variance $
Quantity variance $
Total direct materials cost variance $

2-

Direct Materials and Direct Labor Variance Analysis

Abbeville Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 70 employees. Each employee presently provides 36 hours of labor per week. Information about a production week is as follows:

Standard wage per hr. $16.20
Standard labor time per faucet 20 min.
Standard number of lb. of brass 1.40 lb.
Standard price per lb. of brass $10.25
Actual price per lb. of brass $10.50
Actual lb. of brass used during the week 8,700 lb.
Number of faucets produced during the week 6,000
Actual wage per hr. $16.70
Actual hrs. per week 2,520 hrs.

Required:

a. Determine the standard cost per faucet 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
Total standard cost per unit $

b. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Direct materials price variance $
Direct materials quantity variance
Total direct materials cost variance $

c. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Direct labor rate variance $
Direct labor time variance
Total direct labor cost variance $

Solutions

Expert Solution

1. Direct Material Price Variance = (Actual Price - Standard Price) x Actual Quantity
= ($6.30 - $6) x 500 = $150 (U)
Actual Price = $3150 / 500 = $6.30

Direct Material Quantity Variance = (Actual Quantity - Standard Quantity) x Standard Rate
= (500 - 450) x $6 = $300 (U)
Since 450 Tablets are produced, standard quantity for labor is 1 per unit

Total Direct Material Variance = $150 + $300 = $450 (U)

2.

Direct materials standard cost per unit $ 14.35 =1.4*10.25
Direct labor standard cost per unit $ 5.40 =16.2*20/60
Total standard cost per unit $ 19.75


Since there are 60 minutes in hour, therefore direct labor standard cost per unit has been calculated as 16.2*20/60

Direct Material Price Variance = (Actual Price - Standard Price) x Actual Quantity
= ($10.50 - $10.25) x 8700 = $2175 (U)

Direct Material Quantity Variance = (Actual Quantity - Standard Quantity) x Standard Rate
= (8700 - 8400) x $10.25 = $3075 (U)
Standard Quantity = 6000 x 1.4 = 8400

Total Direct Material Variance = $2175 + $3075 = $5250 (U)

Direct Labor Rate Variance = (Actual Rate - Standard Rate) x Actual Hours
= ($16.70 - $16.20) x 2520 = $1260 (U)

Direct labor Efficiency Variance = (Actual Hours - Standard Hours) x Standard Rate
= (2520 - 2000) x $16.20 = $8424 (U)
Standard Hours = (6000 x 20) / 60 = 2000 hours

Total Direct Labor Variance = $1260 + $8424 = $9684 (U)


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