Question

In: Accounting

Lemon Company manufactures a single product. The company manufactured 5,000 units in March, using 6,150 pounds...

Lemon Company manufactures a single product. The company manufactured 5,000 units in March, using 6,150 pounds of material and 2,420 labor hours. During the same month, they purchased 6,200 pounds of material for $151,590. The actual labor cost for March was $39,930. There were no beginning or ending work-in-process inventories. The company has the following unit standard costs for direct materials and labor.
Budgeted quantity Per unit Budgeted price

Direct materials 1.20 pounds $25 per pound

Direct labor 0.50 hours $15 per hour

1.) The direct material price variance for March is:

2.) The direct material usage variance for March is:

3.)The direct manufacturing labor efficiency variance for March is:

Solutions

Expert Solution

Standard price = $25 per pound

Standard quantity = 1.20 pounds per unit

Actual output = 5,000 units

Standard quantity for Actual output = Standard quantity x Actual output

= 1.20 x 5,000

= 6,000 pounds

Actual quantity = 6,200 pounds

Actual cost of materials = $151,590

Actual price = Actual cost of materials / Actual quantity

= 151,590/6,200

= $24.45

1.

Direct materials price variance = Actual quantity x ( Standard price - Actual price)

= 6,200 x (25-24.45)

= 6,200 x (0.55)

= $3,410 favorable

The direct material price variance for March is= $3,410 favorable

2.

Direct materials usage variance = Standard price x (Standard quantity - Actual quantity)

= 25 x (6,000-6,200)

= 25 x (-200)

= $5,000 unfavorable

The direct material usage variance for March is= $5,000 unfavorable

3.

Standard rate = 15 per hour

Standard time = 0.50 hour per unit

Actual output = 5,000 units

Standard time for Actual output = Standard time x Actual output

= 0.50 x 5,000

= 2,500 hours

Actual time = 2,420 hours

Direct manufacturing labor efficiency variance = Standard rate x ( Standard time - Actual time)

= 15 x (2,500-2,420)

= 15 x (80)

= $1,200 favorable

The direct manufacturing labor efficiency variance for March is = $1,200 favorable

Kindly comment if you need further assistance.

Thanks‼!


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