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	1.5 kilos	2.5 liters		0.20 hours	0.90 hours
Zeta7	3.5 kilos	3.5 liters		0.35 hours	0.80 hours

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

Material	Purchases		Purchase Cost	Standard Price		Used in Production
X442	14,700	kilos	$64,680	$4.20	per kilo	9,200	kilos
Y661	15,700	liters	$23,550	$1.60	per liter	13,700	liters

The following additional information is available:

1. The company recognizes price variances when materials are purchased.

2. The standard labor rate is $22.00 per hour in Sintering and $20.50 per hour in Finishing.

3. During May, 1,200 direct labor-hours were worked in Sintering at a total labor cost of $27,840, and 2,920 direct labor-hours were worked in Finishing at a total labor cost of $65,700.

4. Production during May was 2,200 Alpha6s and 1,700 Zeta7s.

Required:

1. Complete the standard cost card for each product, showing the standard cost of direct materials and direct labor.

2. Compute the materials price and quantity variances for each material.

3. Compute the labor rate and efficiency variances for each operation.

Answer 1

alpha 6:

particulars	standard quantity or hours	standar price	standard cast
direct material-x442	2.liters	2.90 per liters	$5.8
direct material -y661	3 liters	1.90 per liters	$5.7
direct labour sintering	0.2hours	22.0per hour	$4.4
direct labour finishing	0.90hours	20.50per hour	$18.45
Total			$34.35

zeta 7:

direct material-x442	5.0 kilos	2.9 per liters	$14.5
direct material -y661	4.0liters	1.9 per liters	$7.6
direct labour sintering	0.40	22.00	$8.8
labour finishing	1.00	20.50	$ 20.5
total			$ 51.4

2.

PARTICULARS	AMOUNT	AMOUNT
MATERIAL VARIANCES - material 442* material price variances direct material variances y661 prince variances quality varainces	3100 1537 1650 6460	n f f u

• working notes : direct material variances - material *442
• material variances
• price = 3.1-2.90=*1500= 3100
• material quality varainces standrd cosr price
• 15500-10200*2.90
• 1537
• direct material varaiances
• 1.80-1.90*16500
• 1650
• material quality varaiances
• 14500-11100*1.90
• 6460u
• labour variance 2640u
• labour efficiency variances 9240u
• labour rate variances = 6000u
• labour efficiency variances = 1845u