Question

Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing. Each of the products uses two raw materials, X442 and Y661. 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	X442	Y661		Sintering	Finishing
Alpha6	3.0 kilos	2.0 liters		0.40 hours	1.00 hours
Zeta7	5.0 kilos	5.0 liters		0.50 hours	1.20 hours

  

Information relating to materials purchased and materials used in production during May follows:

  

Material	Purchases	Purchase Cost	Standard Price		Used in Production
X442	15,700 kilos	$51,810	$3.10	per kilo	10,200	kilos
Y661	16,700 liters	$20,040	$1.30	per liter	14,700	liters

  

The following additional information is available:
a.	The company recognizes price variances when materials are purchased.
b.	The standard labor rate is $23.00 per hour in Sintering and $21.50 per hour in Finishing.
c.	During May, 1,450 direct labor-hours were worked in Sintering at a total labor cost of $35,090, and 3,020 direct labor-hours were worked in Finishing at a total labor cost of $70,970.
d.	Production during May was 2,300 Alpha6s and 700 Zeta7s.

  

Requied:
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.)

     

2.	Compute the materials price and quantity variances for each material. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).)

     

I really just need help with 2 & 3 , I have all 1 done and correct

3.	Compute the labor rate and efficiency variances for each operation. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e, zero variance).)

     

Answer 1

Solution 1:

Standard cost card - Alpha 6
Particulars	Per unit cost
Direct Material:
X442 (3*$3.10)	$9.30
Y661 (2*$1.30)	$2.60
Direct Labor:
Sintering (0.4*$23)	$9.20
Finishing (1*$21.50)	$21.50
Total	$42.60

Standard cost card - Zeta 7
Particulars	Per unit cost
Direct Material:
X442 (5*$3.10)	$15.50
Y661 (5*$1.30)	$6.50
Direct Labor:
Sintering (0.5*$23)	$11.50
Finishing (1.2*$21.5)	$25.80
Total	$59.30

Solution 2:

Material variances - X442:

Standard quantity for actual production = (2300*3) + (700*5 ) = 10400 Kilo

Actual quantity purchased = 15700 Kilo

Actual usage = 10200 Kilo

Standard price = $3.10 per Kilo

Acutal price = $51,810 / 15700 = $3.30 per Kilo

Material price variance = (SP - AP) * AQ Purchased = ($3.10 - $3.30) * 15700 = $3,140 U

Material quantity variance = (SQ - AQ) * SP = (10400 - 10200) * $3.10 = $620 F

Material variances - Y661:

Standard quantity for actual production = (2300*2) + (700*5 ) = 8100 Liters

Actual quantity purchased = 16700 liters

Actual usage = 14700 liters

Standard price = $1.30 per liter

Acutal price = $20,040 / 16700 = $1.20 per liter

Material price variance = (SP - AP) * AQ Purchased = ($1.30 - $1.20) * 16700 = $1,670 F

Material quantity variance = (SQ - AQ) * SP = (8100 - 14700) * $1.30 = $8,580 U

Solution 3:

Labor variances - Sintering:

Standard hours for actual production = (2300*0.4) + (700*0.5) = 1270 hours

Actual hours = 1450 hours

Standard rate = $23 per hour

Actual rate = $35,090 / 1450 = $24.20 per hour

Direct labor rate variance = (SR - AR) * AH = ( $23 - $24.20) * 1450 = $1,740 U

Direct labor efficiency variance = (SH - AH) * SR = (1270 - 1450) * $23 = $4,140 U

Labor variances - Finishing:

Standard hours for actual production = (2300*1) + (700*1.2) = 3140 hours

Actual hours = 3020 hours

Standard rate = $21.50 per hour

Actual rate = $70,970 / 3020 = $23.50 per hour

Direct labor rate variance = (SR - AR) * AH = ( $21.50 - $23.50) * 3020 = $6,040 U

Direct labor efficiency variance = (SH - AH) * SR = (3140 - 3020) * $21.50 = $2,580 F