Question

Direct Materials and Direct Labor Variance Analysis

Abbeville Fixture Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 40 employees. Each employee presently provides 40 hours of labor per week. Information about a production week is as follows:

Standard wage per hour	$12.60
Standard labor time per faucet	10 min.
Standard number of lbs. of brass	1.3 lbs.
Standard price per lb. of brass	$12.50
Actual price per lb. of brass	$12.75
Actual lbs. of brass used during the week	10,846 lbs.
Number of faucets produced during the week	8,100
Actual wage per hour	$12.98
Actual hours per week (40 employees × 40 hours)	1,600 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 faucet	$
Direct labor standard cost per faucet	$
Total standard cost per faucet	$

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.

Price variance	$
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.

Rate variance	$
Time variance	$
Total direct labor cost variance	$

Answer 1

a.
	Direct materials Standard cost per Faucet				(1.3*12.50)		16.25
	Direct labor standard cost per faucet				(12.60*10/60)		2.1
	total standard cost per faucet						18.35
b)	Materials price variance
	(Actual price - standard price)*AQ purchased
	(12.75- 12.50)*10,846
	2711.5	U
	Material qty variance
	(Actual qty - standard qyt)*Standard price
	(10,846    - 8,100*1.3)*12.5
	3950	U
	total direct materials cost variance				6661.5	U
c)	Rate variance
	(Actual rate - standard rate)*actual hours
	(12.98-12.60)*1600
	608	U
	Time variance
	(Actual hours - standard hours)*standard rate
	(1,600    - 8100*10/60)*12.60
	3150	U
	total direct labor cost variance				3758	U