Question

Direct Materials and Direct Labor Variance Analysis

Abbeville Fixture Company manufactures units in a small manufacturing facility. The units 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	$13.2
Standard labor time per unit	15 min.
Standard number of lbs. of brass	2.1 lbs.
Standard price per lb. of brass	$11.25
Actual price per lb. of brass	$11.5
Actual lbs. of brass used during the week	16,871 lbs.
Number of units produced during the week	7,800
Actual wage per hour	$13.6
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	$	???
Direct Materials Quantity Variance	$	???
Total Direct Materials Cost Variance	$	???

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	$ ???
Direct Labor Time Variance	$ ???
Total Direct Labor Cost Variance	$ ???

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	2.1*11.25 = 23.63
Direct labor standard cost per unit	13.2*15/60 = 3.30
Total standard cost per unit	$26.93

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	(11.25-11.50)*16871	4218 Unfavorable
Direct Materials Quantity Variance	(7800*2.1-16871)*11.25	5524 Unfavorable
Total Direct Materials Cost Variance	(7800*23.63-194016.50)	9702 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	(13.2-13.60)*1080	432 Unfavorable
Direct Labor Time Variance	(7800*.25-1080)*13.2	-11484 Favorable
Total Direct Labor Cost Variance		-11052 Favorable