Question

Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing. Each of the products uses two raw materials—X442 and Y661. The company uses a standard cost system, with the following standards for each product (on a per unit basis):

	Raw Material			Standard Labor Time
Product	X442	Y661		Sintering	Finishing
Alpha6	3.0 kilos	2.0 liters		0.30 hours	1.20 hours
Zeta7	5.0 kilos	4.0 liters		0.40 hours	1.20 hours

Information relating to materials purchased and materials used in production during May follows:

Material	Purchases		Purchase Cost	Standard Price		Used in Production
X442	14,900	kilos	$37,250	$2.30	per kilo	9,400	kilos
Y661	15,900	liters	$19,080	$1.30	per liter	13,900	liters

The following additional information is available:

The company recognizes price variances when materials are purchased.

The standard labor rate is $23.00 per hour in Sintering and $19.50 per hour in Finishing.

During May, 1,250 direct labor-hours were worked in Sintering at a total labor cost of $29,000, and 2,940 direct labor-hours were worked in Finishing at a total labor cost of $63,210.

Production during May was 1,500 Alpha6s and 1,000 Zeta7s.

Required:

1. Complete the standard cost card for each product, showing the standard cost of direct materials and direct labor.

2. Compute the materials price and quantity variances for each material.

3. Compute the labor rate and efficiency variances for each operation.

Answer 1

Ans 1
	Standard Quantity or Hours		Standard Price or rate		Standard cost
Alpha6
Direct Material-X442	3	kilos	$2.30	per kilo	$6.90
Direct Material-Y661	2	litres	1.3	per litre	$2.60
Direct Labor-Sintering	0.3	hours	23	per hour	$6.90
Direct Labor-Finishing	1.2	hours	19.5	per hour	$23.40
				Total	$39.80
Zeta7
Direct Material-X442	5	Kilos	$2.30	per kilo	$11.50
Direct Material-Y661	4	litres	1.3	per litre	$5.20
Direct Labor-Sintering	0.4	hours	23	per hour	$9.20
Direct Labor-Finishing	1.2	hours	19.5	per hour	$23.40
				Total	$49.30
ans 2
Material Price Variance
(AQ*AP)-(AQ purchased*standard rate)
Material X442
37250-(14900*2.3)	2980	U
Material Y661	1590	F
19080-(15900*1.3)	-1590
Material Quantity varaince
SP*(AQ used-SQ allowed)
Material X442	230	F
2.3*(9400-((1500*3)+(1000*5))	-230
Material Y661	8970	U
1.3*(13900-((1500*2)+(1000*4)))
ans 3
Labor rate variance
Actual cost-(AH*SH)
Sintering	250	U
29000-(1250*23)
Finishing	5880	U
63210-(2940*19.5)
Labor efficiency variance
SR*(AH-SH allowed)
Sintering	9200	U
23*(1250-((1500*.3)+(1000*.4)))
Finishing	1170	F
19.5*(2940-((1500*1.2)+(1000*1.2)))	-1170

If any doubt please comment