Question

2. Mansfield Company makes wiring harnesses for the automotive industry. Its standard costs for each harness are 2 direct labor hours per unit at $23 of labor cost per hour, and one pound of plastic harness material at $1.25 per pound. Actual manufacturing data for the period are as follows: Number of Units Manufactured 40,000 Number of Direct Labor Hours Used 79,400 Actual Direct Labor Cost $1,746,800 Number of Pounds of Direct Material Used 40,800 Number of Pounds of Direct Material Purchased 41,000 Actual Direct Material Cost $51,000 Calculate Direct Labor Rate Variance __________ Calculate Direct Labor Quantity Variance __________ Calculate Direct Material Price Variance __________ Calculate Direct Material Quantity Variance __________

Answer 1

1.

Actual direct labor cost per hours = total direct labor cost / no. of direct labor hour used

                                                     = $1,746,800/79,400 = $ 22 per hour

Labor price Variance = (Actual rate - Standard rate) × Actual hour

                                     = ($ 22 - $ 23) x 79,400

                                     = - $ 1 x 79,400 = - $79,400    F

2.

Standard hours of direct labor for actual production

= Standard hours needed per unit x actual unit of production

= 2 hours x 40,000 = 80,000 hours

Direct labor quantity Variance = (Actual hours - Standard hours) x Standard rate

                                              = (79,400 – 80,000) x $ 23

                                             = - 600 x $ 23 = - 13,800      F

3.

Actual cost of direct material = Cost of direct material/Quantity of direct material purchased

= $ 51,000 /41,000 = $ 1.244 per pounds

Direct material price variance = (Actual price – Standard price) x Actual quantity

                                          = ($ 1.244 - $ 1.25) x 40,800

                            = - $ 0.006 x 40,800 = - $ 244.8        F

4.             

Standard quantity of direct material for actual production = 1 pound x 40,000 = 40,000 pounds

Direct material efficiency variance = (Actual quantity - Standard quantity) x Standard price

                                                             = (40,800 – 40,000) x $ 1.25

                                                              = 800 x $ 1.25 = $ 1,000     U