Question

Direct Materials and Direct Labor Variance Analysis Best Faucet Company manufactures faucets in a small manufacturing facility. The faucets are made from zinc. Manufacturing has 70 employees. Each employee presently provides 36 hours of labor per week. Information about a production week is as follows: Standard wage per hour $12.6 Standard labor time per faucet 20 min. Standard number of lbs. of zinc 1.7 lbs. Standard price per lb. of zinc $10.5 Actual price per lb. of zinc $10.75 Actual lbs. of zinc used during the week 14,700 lbs. Number of faucets produced during the week 8,400 Actual wage per hour $13 Actual hours per week 2,520 hrs. Required: a. Determine the standard cost per faucet for direct materials and direct labor. Round the cost per unit to two decimal places. Direct materials standard cost per faucet $ Direct labor standard cost per faucet $ Total standard cost per faucet $ b. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Price variance $ Quantity variance $ Total direct materials cost variance $ c. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Rate variance $ Time variance $ Total direct labor cost variance $

Answer 1

No of Employees	70
Labour hrs per employee per week	36
standard wage per hour $12.6
standard labor time per faucet 20 minutes
standard number of pounds of zinc 1.7 lbs.
standard price per pound of zinc $10.50
actual price per pound of zinc $10.75
actual pounds of zinc used during the week 14,700 lbs.
number of faucets produced during the week 8,400
actual wage per hour $13
actual hours per week 2,520 hours
a. Determine the standard cost per faucet for direct materials and direct labor.
Standard cost of direct material per faucet = Standard pounds of zinc per unit*StandardPrice of zinc
	=1.7lbs*10.50
	$         17.85
Standard cost of direct labour per faucet = Standard labour hrs per unit*Standard Cost per hr of labour
	= (20min/60min) hrs*12.6
	= 0.33 hrs*12.6
	$            4.20
b. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance
Direct Material Price Variance: ( Actual Price - Standard Price )*? Actual Quantity
	= ($10.75 - $10.50)*14700 lbs
	$   3,675.00	(unfavourable)
Direct Material Quantity Variance: = (Actual Quantity - Standard Quantity) x Standard cost per pound
	=(14700 lbs - 8400 units*1.7 lbs-)*10.50
	$   4,410.00	Unfavouable
Total Direct Material Cost Variance = Direct Material Price Variance+ Direct Material Quantity Variance
	= $3675+$4410
	$   8,085.00	Unfavouable
c Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance.
Direct Labour Price Variance= (Actual Rate -Standad Rate )* Actual Hrs
	= ($13- $12.60)*2520hrs
=	1008	Unfavourable
Direct Labour Quantity Variance= (actual hrs worked - Std hrs for actual output)standard rate
	(2520 hrs - 0.3333 hrs*8400 units)12.60$
=	(2520 hrs - 2800 hrs)12.60$
	-3528
Total Direct Labour Cost Variance = Direct Labour Price Variance+ Direct Labour Quantity Variance
	= $ 1008-3525
	-2517