Question

Direct Materials and Direct Labor Variance Analysis

Abbeville Fixture Company manufactures units in a small manufacturing facility. The units are made from brass. Manufacturing has 30 employees. Each employee presently provides 35 hours of labor per week. Information about a production week is as follows:

Standard wage per hour	$15.6
Standard labor time per unit	10 min.
Standard number of lbs. of brass	1.8 lbs.
Standard price per lb. of brass	$9.5
Actual price per lb. of brass	$9.75
Actual lbs. of brass used during the week	13,905 lbs.
Number of units produced during the week	7,500
Actual wage per hour	$16.07
Actual hours for the week (30 employees × 35 hours)	1,050 hrs.

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

		Amount in $
a)	Standard Cost Per Unit
	Direct Material	17.10	(Standard Price * Standard Quantity for Actual Production)/Actual Production
	Direct Labour	2.60	(Standard Rate * Standard Hours for Actual Production)/Actual Production
	Total Standard Cost Per Unit	19.70
b)
	Material Price Variance	3,476.25	Unfavourable	(Actual Price-Standard Price)xActual Quantity of Material Used
	Material Usage Variance	3,847.50	Unfavourable	(Actual Quantity-Standard Quantity)xStandard Price
	Material Cost Variance	7,323.75	Unfavourable
c)	Labour Rate Variance	493.50	Unfavourable	(Actual Rate-Standard Rate)xActual Hours worked
	Labour Time Variance	-3,120.00	Favourable	(Actual Hours-Standard Hours)xStandard Rate
	Labour Cost Variance	-2,626.50	Favourable