Question
In: Accounting
Problem 9-25 Direct Materials and Direct Labor Variances; Computations from Incomplete Data [LO9-4, LO9-5] Sharp Company...
Problem 9-25 Direct Materials and Direct Labor Variances; Computations from Incomplete Data [LO9-4, LO9-5]
Sharp Company manufactures a product for which the following standards have been set:
| Standard Quantity or Hours |
Standard Price or Rate |
Standard Cost |
||||||
| Direct materials | 3 | feet | $ | 5 | per foot | $ | 15 | |
| Direct labor | ? | hours | ? | per hour | ? | |||
During March, the company purchased direct materials at a cost of $43,335, all of which were used in the production of 2,425 units of product. In addition, 4,000 direct labor-hours were worked on the product during the month. The cost of this labor time was $28,000. The following variances have been computed for the month:
| Materials quantity variance | $ | 3,750 | U |
| Labor spending variance | $ | 2,780 |
U |
| Labor efficiency variance | $ | 780 |
U |
Required:
1. For direct materials:
a. Compute the actual cost per foot of materials for March.
b. Compute the price variance and the spending variance.
2. For direct labor:
a. Compute the standard direct labor rate per hour.
b. Compute the standard hours allowed for the month’s production.
c. Compute the standard hours allowed per unit of product.
Solutions
Expert Solution
| Req 1a) | Let the actual quanity be x | ||||||||
| Material Quantity Variance = (Standard quantity - Actual Quantity ) Standard Price | |||||||||
| -3750 = ((2425*3) - x )*5 | |||||||||
| By solving above we get, | |||||||||
| x=8025 | |||||||||
| Actual quanity = 8025 feet | |||||||||
| Cost per fee= Actual cost / actual quanity | |||||||||
| =43335/8025 | |||||||||
| 5.40 | |||||||||
| Req 1 b) | Material Price Variance = (Standard Price - Actual Price ) Actual Quantity | ||||||||
| =(5-5.4 ) * 8025 | |||||||||
| 3,210 | U | ||||||||
| Material spending Variance = Material price variance + quanity variance | |||||||||
| = -3750 + (-3210) | |||||||||
| = 6960 | U | ||||||||
| Req. 2A | Let the standard labor rate be "x" | ||||||||
| Labour Rate Variance = (Standard Rate - Actual Rate) Actual Hrs Worked | |||||||||
| -2780 = (x-(28000/4000))* 4000 | |||||||||
| x=6.305 | |||||||||
| Req 2b | Standard Hours allowed for the months Production; let the standard hours be "x" | ||||||||
| Labour Efficiency Variance = (Standard Hrs. - Actual Hrs) Standard Rate | |||||||||
| Putting values in above formula we get | |||||||||
| -780 = (x-4000)*6.305 | |||||||||
| -780 = 6.305x - 25220 | |||||||||
| 6.305x = 24440 | |||||||||
| x = 3876 | |||||||||
| Req 2c | Standard hours allowed per unit = Total standard hours / No. of units produced | ||||||||
| = 3876/2425 | |||||||||
| 1.60 | |||||||||
ekkarill92 answered 1 year agoRelated Solutions
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Problem 9-25 Direct Materials and Direct Labor Variances;
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Sharp Company manufactures a product for which the following
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Standard Price
or Rate
Standard
Cost
Direct materials
3
feet
$
5
per foot
$
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Direct labor
?
hours
?
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?
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Sharp Company manufactures a product for which the following
standards have been set:
Standard Quantity
or Hours
Standard Price
or Rate
Standard
Cost
Direct materials
3
feet
$
5
per foot
$
15
Direct labor
?
hours
?
per hour
?
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Sharp Company manufactures a product for which the following
standards have been set:
Standard Quantity
or Hours
Standard Price
or Rate
Standard
Cost
Direct materials
3
feet
$
5
per foot
$
15
Direct
labor
?
hours
?
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?
During March, the company purchased direct materials at a cost
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Computations from Incomplete Data [LO10-1, LO10-2]
Sharp Company manufactures a product for which the following
standards have been set:
Standard Quantity
or Hours
Standard Price
or Rate
Standard
Cost
Direct
materials
3
feet
$
5
per foot
$
15
Direct labor
?
hours
?
per hour
?
During March, the company purchased direct materials at a cost
of $45,240, all of which were used in the production of 2,190 units
of product....
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Computations from Incomplete Data [LO10-1, LO10-2]
Sharp Company manufactures a product for which the following
standards have been set:
Standard Quantity
or Hours
Standard Price
or Rate
Standard
Cost
Direct materials
3
feet
$
5
per foot
$
15
Direct
labor
?
hours
?
per hour
?
During March, the company purchased direct materials at a cost
of $44,100, all of which were used in the production of 2,350 units
of product....
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Computations from Incomplete Data [LO10-1, LO10-2]
Sharp Company manufactures a product for which the following
standards have been set:
Standard Quantity
or Hours
Standard Price
or Rate
Standard
Cost
Direct
materials
3
feet
$
5
per foot
$
15
Direct labor
?
hours
?
per hour
?
During March, the company purchased direct materials at a cost
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$
14.00
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Variable
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