Question

Diamond Company produces a single product. The company has set the following standards for materials and labor:

	Standard quantity or hours per unit	Standard price or rate
Direct materials	? pounds per unit	$? per pound
Direct labor	4.0 hours per unit	$13 per hour

During the past month, the company purchased 5,800 pounds of direct materials at a cost of $13,630. All of this material was used in the production of 1,800 units of product. Direct labor cost totaled $93,150 for the month. The following variances have been computed:

Materials quantity variance	$	1,020	U
Total materials variance	$	140	F
Labor efficiency variance	$	3,900	F

Required:
1.	For direct materials:

a.	Compute the standard price per pound of materials. (Round your intermediate calculations and final answer to 2 decimal places. Omit the "$" sign in your response.)

Standard price

$  per pound

b.	Compute the standard quantity allowed for materials for the month's production. (Round your intermediate calculations to 2 decimal places.)

Standard quantity

pounds

c.	Compute the standard quantity of materials allowed per unit of product. (Round your intermediate calculations to 2 decimal places.)

Standard quantity

pounds per unit

2.	For direct labor:

a.	Compute the actual direct labor hours for the month.

Actual direct labor hours

b.

Compute the labor rate variance. (Input the amount as a positive value. Leave no cells blank - be certain to enter "0" wherever required. 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 intermediate calculations to 2 decimal places. Omit the "$" sign in your response.)

Labor rate variance

$

(Click to select)  F  U  None

Answer 1

	Materials price variance
	Materials quantity variance			1,020	U
	Total materials varianc			140	F
	Materials price variance			1,160	F
1)	Materials price variance
a)	(Actual price - standard price)*AQ purchased
	13,630	-	x	=	1,160
	x =	14,790
	Standard price per pound of materials				2.55	per pound
b)	Standard quantity				5400	pounds
	Materials quantity variance
	(AQ used - standard qty allowed)*standard rate
	14,790	-	2.55	x	=	1,020
	x =	5400
c)	standard quantity				3	pounds per unit
2a)	Actual direct labor hours				6900
	labor Efficiency variance
	(Actual hours - standard hrs)*standard rate = efficiency variance
	13x	-	93600	=	3,900
	x	6900
b)	labor rate variance				3,450	U
	(actual rate - standard rate)*actual hours
	93,150	-	89700
	3,450	U