Question

Problem 11-16 Multiple Products, Materials, and Processes [LO11-1, LO11-2] Monte Rosa Corporation produces two products, Alpha8s and Zeta9s, which pass through two operations, Sintering and Finishing. Each of the products uses two raw materials, X342 and Y561. The company uses a standard cost system, with the following standards for each product (on a per unit basis):

	Raw Material			Standard Labor Time
Product	X342	Y561		Sintering	Finishing
Alpha8	1.8 kilos	2.0 liters		0.20 hours	0.80 hours
Zeta9	3.0 kilos	4.5 liters		0.35 hours	0.90 hours

Information relating to materials purchased and materials used in production during May follows: Material Purchases Purchase Cost Standard Price Used in Production     X342 14,000 kilos $51,800 $3.50 per kilo 8,500 kilos     Y561 15,000 liters $19,500 $1.40 per liter 13,000 liters

The following additional information is available:
a.	The company recognizes price variances when materials are purchased.
b.	The standard labor rate is $20.00 per hour in Sintering and $19.00 per hour in Finishing.
c.	During May, 1,200 direct labor-hours were worked in Sintering at a total labor cost of $27,000, and 2,850 direct labor-hours were worked in Finishing at a total labor cost of $59,850.
d.	Production during May was 1,500 Alpha8s and 2,000 Zeta9s.

    

Required:
1.	Complete the standard cost card for each product, showing the standard cost of direct materials and direct labor. (Round your answers to 2 decimal places.)

  

Standard Quantity or Hours Standard Price or Rate Standard Cost Alpha8: Direct materials-X342 1.80 kilos $3.50 per kilo $6.30 Direct materials-Y561 2.00 liters $1.40 per liter 2.80 Direct labor-Sintering 0.20 hours $20.00 per hour 4.00 Direct labor-Finishing 0.80 hours $19.00 per hour 15.20 Total $28.30 Zeta9: Direct materials-X342 3.00 kilos $3.50 per kilo $10.50 Direct materials-Y561 4.50 liters $1.40 per liter 6.30 Direct labor-Sintering 0.35 hours $20.00 per hour 7.00 Direct labor-Finishing 0.90 hours $19.00 per hour 17.10 Total $40.90

2.	Compute the materials quantity and price variances for each material. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Round your answers to 2 decimal places.)

	Direct Materials Variances—Material X342: Standard Rate − Actual Rate × Actual Quantity = Variance Materials price variance 0 − × = Variance Materials quantity variance Direct Materials Variances—Material Y561: − × = Variance Materials price variance − × = Variance Materials quantity variance

3.	Compute the direct labor efficiency and rate variances for each operation. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Round your answers to 2 decimal places.)

	Direct Labor Variances—Sintering:    −    ×    = Variance Labor rate variance − × = Variance Labor efficiency variance Direct Labor Variances—Finishing: − × = Variance Labor rate variance − × = Variance Labor efficiency variance

Answer 1

Direct Materials Variances—Material X342:
	Standard Rate	-	Actual Rate	X	Actual Quantity	=	Variance
Materials price variance	$3.50		$3.70	X	14000	=	2800	UN Favourable
	Std Qty	-	Actual Qty	X	Std Rate	=	Variance
Material Qty Variance	8700	-	8500	X	3.5	=	700	Favourable
* Actual Rate = 51800/14000= $3.70, Std Qty= (1.8X 1500+3X2000)=
Direct Materials Variances—Material Y561
	Standard Rate	-	Actual Rate	X	Actual Quantity	=	Variance
Materials price variance	1.4		1.3	X	15000	=	1500	Favourable
	Std Qty	-	Actual Qty	X	Std Rate	=	Variance
Material Qty Variance	12000	-	13000	X	1.4	=	1400	UnFavourable
* Actual Rate = 19500/15000= $1.30, Std Qty:=(2X 1500+4.5X 2000)=13000 Ltre
Direct Labour Variance- Sintering
	Standard Rate	-	Actual Rate	X	Actual Hours	=	Variance
Labour Rate Variance	$20		$22.50	X	1200	=	3000	UN Favourable
	Std Qty	-	Actual Hour	X	Std Rate	=	Variance
Labour Efficiency Variance	1000	-	1200	X	20	=	4000	UN Favourable
* Actual Rate = 27000/1200= $22.50, Std Qty= (0.20X 1500+0.35X2000)=1000 Hour
Direct Labour Variance- Finishing
	Standard Rate	-	Actual Rate	X	Actual Hours	=	Variance
Labour Rate Variance	$19		$21	X	2850	=	5700	UN Favourable
	Std Qty	-	Actual Hour	X	Std Rate	=	Variance
Labour Efficiency Variance	3000	-	2850	X	19	=	2850	Favourable
* Actual Rate = 59850/2850= $21, Std Qty= (0.80X 1500+0.90X2000)=3000 Hour