Question

1. We are analyzing 2 products – product X and product Y.
   • Product X requires 4 Part As and 3Part B’s.
   • Product Y requires 3 Part A’s and 2 Part B’s.
   • The standard cost for Part A is $24 per unit.
   • The standard cost for Part B is $12 per unit.
   • During this month, the company purchased 50,000 units of Part A for $1,220,000 (there was no beginning balance).
   • During this month, the company purchased 50,000 units of Part B for $590,000 (there was no beginning balance).
   • During the month the company produced 500 Xs and 1000 Ys.
   • During the month the company used 4950 units of Part A and 3540 units of Part B.
   • Factory payroll was $393,000 with 19,500 hours (this is actual - direct labor only).
   • X uses 14 standard direct labor hours.
   • Y uses 12 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 first, then answer the questions.

2.Use the information given in Problem I.

Use standard cost information for all calculations except as noted below.

Department	$Costs	Activity Cost Driver
Supplies	$22,800	Direct labor hours
Assembling	$12,750	Units of standard direct material (Parts)
Packaging	$10,050	Completed units

Questions 26-50: Suggestion: use the worksheet to complete the problem first, then answer the questions.

Answer 1

Material variances

Material A
1	Direct material total variance=(Standrad cost-Actual cost)
		Standard cost (24*5000)=120000
		Actual cost 24.4*4950=120780
		Vriance=(120000-120780))
			-780	(U)
2	Direct material price variance=(Standard cost of actual quantity-Actual cost)
		Standard cost for actual quantity=(4950*24.) =118800
		Actual cost = 120780
		Variance=(118800-120780))
			-1980	(U)
3	Direct material usage variance=(Standard cost of standard quantity for actual production -Standard cost of actual quantity)
			(SQ*SP) - (AQ*SP)
		SQ*SP =	24*5000	120000
		AQ*SP=	4950*24	118800
			Variance =(120000-118800)
			1200	(F)

Material B
1	Direct material total variance=(Standrad cost-Actual cost)
		Standard cost (12*3500)=42000
		Actual cost 11.8*3540=41722
		Vriance=(42000-41722)
			278	(F)
2	Direct material price variance=(Standard cost of actual quantity-Actual cost)
		Standard cost for actual quantity=(3540*12) =42480
		Actual cost = 41722
		Variance=(42480-41722)
			758	(F)
3	Direct material usage variance=(Standard cost of standard quantity for actual production -Standard cost of actual quantity)
			(SQ*SP) - (AQ*SP)
		SQ*SP =	12*3500	42000
		AQ*SP=	3540*12	42480
			Variance =(42000-42480)
			-480	(U)

Labour variance

Labour variances
1	Direct labour total cost variance=(Standard cost-Actual cost)
			Standard	7000*20+12000*20= 380000
			Actual	393000
			Varince	(380000-393000)
				-13000	(U)
2	Direct labour rate variance =(Satndard cost of actual time - Actual cost)
			SR*AH	19500*20	390000
			AR*AH	393000
			Variance	-3000	(U)
3	Directb labour efficiency variance =(SH*SR -AH*SR)
			SH*SR	380000
			AH*SR	390000
			Variance	-10000	(U)