Question

1. We are analyzing 2 products – product X and product Y.
   • Product X requires 3 Part As and 4 Part B’s.
   • Product Y requires 2 Part A’s and 3 Part B’s.
   • The standard cost for Part A is $12 per unit.
   • The standard cost for Part B is $24 per unit.
   • During this month, the company purchased 50,000 units of Part A for $587,500 (there was no beginning balance).
   • During this month, the company purchased 100,000 units of Part B for $2,500,000 (there was no beginning balance).
   • During the month the company produced 500 Xs and 1000 Ys.
   • During the month the company used 3550 units of Part A and 4975 units of Part B.
   • Factory payroll was $393,000 with 19,500 hours (this is actual - direct labor only).
   • X uses 12 standard direct labor hours.
   • Y uses 14 standard direct labor hours.
   • Labor standard cost is $20 per hour.

hint: for production of both X and Y

Questions 1-25: Suggestion: Use a scratch paper to solve all the variances

Answer 1

	Product X	Product Y
Units of A	3	2
Units of B	4	3
Standard Cost of A- $ 12 per unit
Standard cost of B- $ 24 per unit
Standard Material Cost of 1 unit of Product X	132
Standard Material Cost of 1 unit of Product Y		96
Actual Cost Incurred	A	B
No. of units purchased	50000	100000
Price	587500	2500000
Price per unit	11.75	25
	Product X	Product Y	Total
No. of Units Produced	500	1000
Standard Cost of Actual Output	66000	96000	162000
Actual Cost			166088
Direct Material Price Variance	AQP (AP- SP)
A	12500	F
B	100000	U
Total DM Price Variance	87500	U
Direct Material Usage Variance	A	B	Total
Actual Qty Used	3550	4975
Standard Price	12	24
	42600	119400	162000
Standard Qty	3500	5000
Standard Price	12	24
	42000	120000	162000
Direct Material Usage Variance			0
Labour Hours
	X	Y	Total
Labour Hours	12	14
Standard Labour Cost per hour	20	20
Standard Cost per unit	240	280
No. of Units produced	500	1000
Total Standard Labour Cost	120000	280000	400000
Actual Labour Cost
$393000 for 19500 hours			393000
Labour Variance			7000
Labour Rate Variance	AH(AR- SR)
Actual Rate	20.15384615
Labour Rate Variance	19500(20.15385-20)
	2999.1	U
Labour Efficency Variance	SR(AH-SR)
Standard Hours	20000
Labour Efficency Variance	10000	F