Question

Direct Materials and Direct Labor Variance Analysis

Shasta Fixture Company manufactures faucets in a small manufacturing facility. The faucets 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	$15.00
Standard labor time per unit	20 min.
Standard number of lbs. of brass	1.8 lbs.
Standard price per lb. of brass	$11.50
Actual price per lb. of brass	$11.75
Actual lbs. of brass used during the week	12,793 lbs.
Number of units produced during the week	6,900
Actual wage per hour	$15.45
Actual hours for the week (30 employees × 35 hours)	1,050

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

	Answer
	Sr.No	Particulars	Formula and Calculation
a.		a. Direct materials standard cost per unit	11.50*1.8 = 20.7
		b. Direct labor standard cost per unit	15*(20/60) = 5
		c. Total standard cost per unit (a+b)	= $ 25.7
b.	1	Material Price Variance	(Standard price - Actual price) * Actual quantity
			= (11.50 - 11.75) * 12793
			= $ 3198.25 (U)
	2	Material quantity variance	(Standard Quantity - Actual Quantity) * Standard price
			= ((6900*1.8) - 12793) * 11.50
			= $ 4289.50 (U)
	3	Total Direct Materials Cost Variance	(Standard Quantity * Standard Price ) - (Actual Quantity *Actual price )
			= ((6900*1.8) * 11.50) - (12793 * 11.75)
			= $ 7487.75 (U)
c.	3	Direct Labor Rate Variance	(Standard rate - Actual rate) * Actual hours
			= (15 - 15.45) * 1050
			= $ 472.50 (U)
	4	Direct Labor Time Variance	(Standard hours - Actual hours) * Standard rate
			= ((6900 * (20/60)) - 1050) * 15
			= $ 18750 (F)
	5	Total Direct Labor Cost Variance	(Standard Hrs * Standard rate ) - (Actual hrs *Actual rate )
			= ((6900 * (20/60)) * 15) - (1050 * 15.45)
			= $ 18277.50 (F)