Question
In: Accounting
Sharp Company manufactures a product for which the following standards have been set: Standard Quantity or...
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 $52,740, all of which were used in the production of 2,750 units of product. In addition, 4,500 direct labor-hours were worked on the product during the month. The cost of this labor time was $40,500. The following variances have been computed for the month:
| Materials quantity variance | $ | 2,700 | U |
| Labor spending variance | $ | 3,100 |
U |
| Labor efficiency variance | $ | 850 |
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 | |||||||||
| -2700 = ((2750*3) - x )*5 | |||||||||
| By solving above we get, | |||||||||
| x=7710 | |||||||||
| Actual quanity = 7710 feet | |||||||||
| Cost per fee= Actual cost / actual quanity | |||||||||
| =52740/7710 | |||||||||
| 6.84 | |||||||||
| Req 1 b) | Material Price Variance = (Standard Price - Actual Price ) Actual Quantity | ||||||||
| =(5-6.84 ) * 7710 | |||||||||
| 14190 | U | ||||||||
| Material spending Variance = Material price variance + quanity variance | |||||||||
| = -14190 + (-2700) | |||||||||
| = 16890 | U | ||||||||
| Req. 2A | Let the standard labor rate be "x" | ||||||||
| Labour Rate Variance = (Standard Rate - Actual Rate) Actual Hrs Worked | |||||||||
| -3100 = (x-(40500/4500))* 4500 | |||||||||
| -3100 = (x-9)* 4500 | |||||||||
| -3100 = 4500x -40500 | |||||||||
| x=8.31 | |||||||||
| 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 | |||||||||
| -850 = (x-4500)*8.31 | |||||||||
| -850 = 8.31x - 37400 | |||||||||
| 8.31x = 37400-850 | |||||||||
| x = 4398 | |||||||||
 ekkarill92 answered 2 years agoRelated SolutionsSharp Company manufactures a product for which the following standards have been set: Standard Quantity or...
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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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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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or Rate Standard Cost Direct materials 3 feet $ 5 per foot $ 15
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purchased direct materials at a cost of $44,100, all of which were
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Sharp Company manufactures a product for which the following standards have been set: Standard Quantity or...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
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5
per foot
$
15
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hours
?
per hour
?
During March, the company purchased direct materials at a cost
of $53,730, all of which were used in the production of 2,875 units
of product. In addition, 4,700 direct labor-hours were worked on
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Sharp Company manufactures a product for which the following standards have been set: Standard Quantity or...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
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Sharp Company manufactures a product for which the following standards have been set: Standard Quantity or...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 $55,650, all of which were used in the production of 3,200 units
of product. In addition, 4,900 direct labor-hours were worked on
the product during the month. The...
Sharp Company manufactures a product for which the following standards have been set: Standard Quantity or...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 $52,740, all of which were used in the production of 2,750 units
of product. In addition, 4,500 direct labor-hours were worked on
the product during the month. The...
Sharp Company manufactures a product for which the following standards have been set: Standard Quantity or...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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of $54,285, all of which were used in the production of 3,200 units
of product. In addition, 4,900 direct labor-hours were worked on
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Sharp Company manufactures a product for which the following standards have been set: Standard Quantity or...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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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 $54,285, all of which were used in the production of 3,200 units
of product. In addition, 4,900 direct labor-hours were worked on
the product during the month. The...
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