Question

1. 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 36 hours of labor per week. Information about a production week is as follows:

   Standard wage per hour	$12.00
   Standard labor time per unit	15 min.
   Standard number of lbs. of brass	1.7 lbs.
   Standard price per lb. of brass	$12.00
   Actual price per lb. of brass	$12.25
   Actual lbs. of brass used during the week	10,506 lbs.
   Number of units produced during the week	6,000
   Actual wage per hour	$12.36
   Actual hours for the week (30 employees × 36 hours)	1,080

   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

a) Direct Materials standard cost per unit = Standard number of lbs. of brass*Std price per lb.

= 1.7 lbs.*$12.00 = $20.40 per unit

Direct Standard Labor cost per unit = Standard labor time per unit*Standard wage per hour

= (15 minutes/60 minutes)*$12.00 = $3.00 per unit

Total Standard cost per unit = Direct Materials standard cost per unit+Direct Standard Labor cost per unit

= $20.40+$3.00 = $23.40 per unit

b) Direct Materials Price Variance = (Std Price - Actual Price)*Actual Qty used

= ($12.00 - $12.25)*10,506 lbs. = $2,626.50 Unfavorable

Direct Materials Qty Variance = (Std Qty for Actual Production - Actual Qty)*Std Price per lb.

= [(6,000 units*1.7 lbs.) - 10,506 lbs.]*$12.00

= (10,200 - 10,506)*$12.00 = $3,672 Unfavorable

Total Direct Materials Cost Variance = Direct Materials Price Variance+Direct Materials Qty Variance

= $2,626.50 U+$3,672 U = $6,298.50 Unfavorable

c) Direct Labor rate Variance = (Std rate - Actual rate)*Actual hours

= ($12.00 - $12.36)*1,080 hrs = $388.80 Unfavorable

Direct Labor Time Variance = (Std hrs for Actual production- Actual hrs)*Std Rate per hour

= [(6,000 units*15/60 min) - 1,080 hrs]*$12.00

= (1,500 hrs - 1,080 hrs)*$12.00 = $5,040 Favorable

Total Direct Labor Cost Variance = Direct Labor rate Variance+Direct Labor Time Variance

= $388.80 U+$5,040 F = $4,651.20 Unfavorable