Question

Direct Materials and Direct Labor Variance Analysis

Shasta Fixture Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 40 employees. Each employee presently provides 40 hours of labor per week. Information about a production week is as follows:

Standard wage per hour	$14.40
Standard labor time per unit	20 min.
Standard number of lbs. of brass	1.5 lbs.
Standard price per lb. of brass	$11.25
Actual price per lb. of brass	$11.50
Actual lbs. of brass used during the week	12,515 lbs.
Number of units produced during the week	8,100
Actual wage per hour	$14.83
Actual hours for the week (40 employees × 40 hours)	1,600

Required:

a. Determine the standard cost per unit 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. Round your answers to the nearest whole dollar. 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. Round your answers to the nearest whole dollar. 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	$

Answer 1

Given Information,

1. Shasta Fixture Company manufactures faucets in a small manufacturing facility.
2. The faucets are made from brass.
3. Manufacturing has 40 employees.
4. Each employee presently provides 40 hours of labor per week.
5. Information about a production week is as follows:

SR=Standard wage per hour	$14.40
SH=Standard labor time per unit	20 min.
SQ=Standard number of lbs. of brass	1.5 lbs.
SP=Standard price per lb. of brass	$11.25
AP=Actual price per lb. of brass	$11.50
AQ=Actual lbs. of brass used during the week	12,515 lbs.
AO=Number of units produced during the week	8,100
AR=Actual wage per hour	$14.83
AH=Actual hours for the week (40 employees × 40 hours)	1,600

Answer to Question a)

Direct material Standard cost per unit

Sr no	Particulars	Amount $
a	Material Requirement per unit	1.5 lbs
b	Standard price per lb. of brass	$11.25
c	Direct material Standard cost per unit ( a X b)	$16.88

Direct labor standard cost per unit

Sr no	Particulars	Amount $
a	Standard labor time per unit	20 min.
b	Standard wage per hour	$14.40
c	Direct labor standard cost per unit=$14.40 /60 min* 20 min	$4.80

Total standard cost per unit

Sr no	Particulars	Amount $
a	Direct material Standard cost per unit ( 1.5 lbs * $11.25 )	$16.88
b	Direct labor standard cost per unit=$14.40 /60 min* 20 min	$4.80
c	Total standard cost per unit ( a+b)	$21.68

Answer to Question b)Material Variances (favorable variance is entered as negative number using a minus sign and an unfavorable variance as a positive number.)

Sr no	Particulars	Formula	Calculation	Amount $	Variance
a	Direct material Price Variance	AQXSP-AQXAP	(12515 X11.25)-(12515 X 11.50)	3129	Adverse
b	Direct material Quantity Variance	SQXSP-AQXSP	(8100 X 1.5 X11.25)-(12515 X11.25)	4106	Adverse
c	Total Direct Material Cost Variance	SQXSP-AQXAP	(8100 X 1.5 X11.25)-(12515 X 11.50)	7235	Adverse

Answer to Question c) Labour Variances (favorable variance is entered as negative number using a minus sign and an unfavorable variance as a positive number.)

Sr no	Particulars	Formula	Calculation	Amount $	Variance
a	Direct labour Rate variance	AHXSR-AHXAR	(1600X 14.40)-(1600X 14.83)	688	Adverse
b	Direct labour Time variance	SHXSR-AHXSR	(8100X20min/60 minX 14.40)-(1600X 14.40)	-15840	Favorable
c	Direct labour Cost variance	SHXSR-AHXAR	(8100X20min/60 minX 14.40)-(1600X 14.83)	-15152	Favorable

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