Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing....

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	2.0 kilos	1.4 liters	0.50 hours	0.90 hours
Zeta7	4.0 kilos	3.4 liters	0.10 hours	0.90 hours

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

Material	Purchases	Purchase Cost	Standard Price		Used in Production
X442	14,600 kilos	$62,780	$4.10	per kilo	9,100	kilos
Y661	15,600 liters	$21,840	$1.50	per liter	13,600	liters

The following additional information is available:
a.	The company recognizes price variances when materials are purchased.
b.	The standard labor rate is $15.00 per hour in Sintering and $20.00 per hour in Finishing.
c.	During May, 1,300 direct labor-hours were worked in Sintering at a total labor cost of $30,030, and 2,910 direct labor-hours were worked in Finishing at a total labor cost of $64,020.
d.	Production during May was 2,100 Alpha6s and 1,300 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).)

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).)

Solutions

Expert Solution

Particulars	Std Qty	Std Price/Rate	Standard Cost
Alpha 6:
Direct Materials-X442	2 kilos	4.10 per kilo	8.20
Direct Materials-Y661	1.4 litres	1.50 per litre	2.10
Direct Labour-Sintering	0.50 hrs	15 per hr	7.50
Direct Labour-Finishing	0.90 hrs	20 per hr	18.00
Total			35.80
Zeta 7:
Direct Materials-X442	4 kilos	4.10 per kilo	16.40
Direct Materials-Y661	3.4 litres	1.50 per litre	5.10
Direct Labour-Sintering	0.10 hrs	15 per hr	1.50
Direct Labour-Finishing	0.90 hrs	20 per hr	18.00
Total			41.00

Material Price & Quantity Variance :-

Direct Materials Variance-X4442:
Material Price Variance	2920 (U)
Material Quantity variance	1230 (F)
Direct Materials Variance-Y661:
Material Price Variance	1560 (F)
Material Quantity variance	9360 (U)

X4442:-
Material Price Variance = (SR – AR) * A Qty purchased
(4.10 – 4.30) * 14,600 = $2920 (U)

AR = 62780/14600 = $4.30

Material Qty Variance = (SQ – AQ used) * SR
(9400 – 9100) * 4.10 = $1,230 (F)

SQ = Alpha = 2 kilo * 2100 = 4200 &
Zeta = 4 kilo * 1300 = 5200
SQ total = 9,400
AQ used = 9,100

Y661:-
Material Price Variance = (SR – AR) * A Qty purchased
(1.50 – 1.40) * 15600 = $1560 (F)

AR = 21840/15600 = $1.40

Material Qty Variance = (SQ – AQ used) * SR
(7360 - 13600) *1.50 = $9360 (U)

SQ = Alpha = 1.4 Litres*2100 = 2940
Zeta = 3.4 Litres*1300 = 4420

SQ total = 7360
AQ used = 13600

Labour Rate & Efficiency Variance :-
Direct Labour Variances-Sintering:
Labour Rate Variance	10530 (U)
Labour Efficiency Variance	1800 (U)
Direct Labour Variances-Finishing:
Labour Rate Variance	5820 (U)
Labour Efficiency Variance	3000 (F)

Sintering:-
Labour Rate variance = (SR – AR) * A Hrs
(15 – 23.10) * 1300 = 10,530 (U)

AR = 30030/1300 = 23.10
SR = 15

Labour Efficiency Variance = (S Hrs – A Hrs) * SR
(1180 – 1300) * 15 = $1800 (U)

S Hrs = Alpha = 0.50 hrs * 2100 = 1050
Zeta = 0.10 * 1300 = 130
Total Std Hrs = 1180

Finishing:-
Labour Rate variance = (SR – AR) * A Hrs
(20 – 22) * 2910 = 5820 (U)

AR = 64020/2910 = 22
SR = 20

Labour Efficiency Variance = (S Hrs – A Hrs) * SR
ekkarill92 answered 1 year ago Next > < Previous Related Solutions Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing.... 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 2.0 kilos 1.5 liters 0.10 hours 1.00 hours Zeta7 3.0 kilos 4.5 liters 0.30 hours 0.80 hours Information relating to materials purchased and materials... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing.... 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 2.0 kilos 1.5 liters 0.10 hours 0.80 hours Zeta7 3.0 kilos 2.5 liters 0.45 hours 0.90 hours Information relating to materials purchased and materials... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing.... 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 2.0 kilos 1.5 liters 0.10 hours 1.00 hours Zeta7 3.0 kilos 4.5 liters 0.30 hours 0.80 hours Information relating to materials purchased and materials... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing.... 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... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing.... 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... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing.... 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 3.0 liters 0.30 hours 1.10 hours Zeta7 5.0 kilos 5.0 liters 0.40 hours 1.20 hours Information relating to materials purchased and materials... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing.... 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 2.5 kilos 2.5 liters 0.40 hours 1.20 hours Zeta7 4.5 kilos 5.5 liters 0.40 hours 0.80 hours Information relating to materials purchased and materials... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing.... 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 2.5 kilos 2.5 liters 0.20 hours 0.90 hours Zeta7 4.5 kilos 3.5 liters 0.30 hours 1.20 hours Information relating to materials purchased and materials... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing.... 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 2.5 kilos 2.5 liters 0.40 hours 0.90 hours Zeta7 4.5 kilos 4.5 liters 0.35 hours 0.80 hours Information relating to materials purchased and materials... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing.... 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... 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Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing....

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