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 60 employees. Each employee presently provides 32 hours of labor per week. Information about a production week is as follows:

   Standard wage per hour	$17.40
   Standard labor time per unit	20 min.
   Standard number of lbs. of brass	1.9 lbs.
   Standard price per lb. of brass	$12.25
   Actual price per lb. of brass	$12.50
   Actual lbs. of brass used during the week	11,742 lbs.
   Number of units produced during the week	6,000
   Actual wage per hour	$17.92
   Actual hours for the week (60 employees × 32 hours)	1,920

   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	$	Unfavorable
   Direct Materials Quantity Variance	$	Unfavorable
   Total Direct Materials Cost Variance	$	Unfavorable

   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	$	Unfavorable
   Direct Labor Time Variance	$	Favorable
   Total Direct Labor Cost Variance	$	Favorable

Answer 1

Req 1.

Std material cost per unit

Std qty allowed per unt

1.9

Multiply: Std price

12.25

Std material cost per unit

23.275

Std labour cost per unit

Std labour hours per unit

20

mins

Multiply: Std rate per DLH

17.4

Std labour cost per unit

5.8

Req 2.

Std qty allowed for actual output (6000*1.90)

11400

Std price

12.25

Actual Qty used and purchased

11742

Actual price

12.5

Material Price variance = Actual Qty purchased (Std price-Actual price)

11742 (12.25-12.50) = 2935.50 Unfav

Material Qty variance = Std price (Std qty-Actual qty used)

12.25(11400-11742) = 4189.50 Unfav

Material cost variance = Std qty*Std price - Actual Qty*Actual price

11400*12.25 - 11742*12.50 = 7125 Unfav

Req 3.

Std labour hours (6000*20/60)

2000

Std rate per DLH

17.4

Actual hours worked

1920

Actual rate

17.92

Labour rate variance = Actual hours (Std rate -Actual rate)

1920 (17.40 - 17.92) = 998.40 Unfav

Labour Efficiency variance = Std rate (Std hours -Actual Hours)

17.40 (2000-1920) = 1392 Fav

Labour cost variance= Std rate *Std hours -Actual hours *Actual rate

17.40*2000 - 17.92*1920 = 393.60 Fav