Question

Direct Materials and Direct Labor Variance Analysis

Abbeville 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	$15.00
Standard labor time per faucet	20 min.
Standard number of lbs. of brass	1.3 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	10,444 lbs.
Number of faucets produced during the week	7,800
Actual wage per hour	$15.45
Actual hours for the week (30 employees × 36 hours)	1,080 hrs.

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

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 (12.25*1.3)	$15.93
Direct labor standard cost per unit (15*20/60)	$5
Total standard cost per unit	$20.93

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 (12.25-12.50)*10444	$2611	Unfavorable
Direct Materials Quantity Variance (7800*1.3-10444)*10.25	$3116	Unfavorable
Total Direct Materials Cost Variance	$5727	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 (15-15.45)*1080	$486	Unfavorable
Direct Labor Time Variance (2600-1080)*15	-22800	Favorable
Total Direct Labor Cost Variance	-22314	Favorable