Question
In: Accounting
Problem 10-11 Direct Materials and Direct Labor Variances; Computations from Incomplete Data [LO10-1, LO10-2] Sharp Company...
Problem 10-11 Direct Materials and Direct Labor Variances; Computations from Incomplete Data [LO10-1, LO10-2]
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 $45,240, all of which were used in the production of 2,190 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 $31,500. The following variances have been computed for the month:
| Materials quantity variance | $ | 1,950 | U |
| Labor spending variance | $ | 3,030 |
U |
| Labor efficiency variance | $ | 780 |
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
| 1 | For Direct Material | ||||||||||||
| a. | Compute the actual cost per foot for materials for March | ||||||||||||
| Materials quantity variance = SP (AQ ? SQ) | |||||||||||||
| **$1,950 U = $5.00 per foot (AQ ? 8730 feet*) | |||||||||||||
| 390 = AQ-8730 feet | |||||||||||||
| AQ = 9120 feet | |||||||||||||
| *SQ for Actual Units = 3 p.u*2190 units = 8730 feet | |||||||||||||
| **When used with the formula, unfavorable variances are positive and favorable variances are negative | |||||||||||||
| Therefore, $45240 ÷ 9120 feet | 4.960526 | 45244.32 | |||||||||||
| = $4.961 per foot (Actual Price) | |||||||||||||
| b. | Compute the price variance and the spending variance | ||||||||||||
| Materials price variance = AQ (AP ? SP) | |||||||||||||
| = AQ*AP - AQ*SP | |||||||||||||
| = 45240-9120*5 | |||||||||||||
| = 360 F | |||||||||||||
| The total variance for materials is | |||||||||||||
| Materials price variance | 1950 U | ||||||||||||
| Materials quantity variance | 360 F | ||||||||||||
| Total (Spending) variance | 1590 U | ||||||||||||
| 2 | For Direct Labour | ||||||||||||
| Compute the standard direct labor rate per hour. | |||||||||||||
| Labor rate variance = AH (AR ? SR | |||||||||||||
| = *2250U = 4500 hrs($7-SR) | |||||||||||||
| = 2250 = $31500-4500SR | |||||||||||||
| 4500SR = 31500-2250 | |||||||||||||
| SR = 29250/4500 | |||||||||||||
| SR = $6.50/hr | |||||||||||||
| *Labour Rate Variance = Labour Spending Variance - Labor efficiency variance | |||||||||||||
| = 3030 U - 780U | |||||||||||||
| = 2250 U | |||||||||||||
| ** Actual Rate = Actual labour Cost/actual hrs worked | |||||||||||||
| = 31500/4500 hrs | |||||||||||||
| $7/hr | |||||||||||||
| b. | Compute the standard hours allowed for the month’s production | ||||||||||||
| Labor efficiency variance = SR (AH ? SH) | |||||||||||||
| 780 U = $6.50(4500 hrs-SH) | |||||||||||||
| 120 = 4500hrs-SH | |||||||||||||
| SH = 4500-120 | |||||||||||||
| Standard hrs = 4380 hrs | |||||||||||||
| c. | Compute the standard hours allowed per unit of product | ||||||||||||
| The standard hours allowed per unit of product are | |||||||||||||
| = Standard Hrs/Units Produced | |||||||||||||
| 4380 hrs/2190 units | |||||||||||||
| = 2hrs/unit | |||||||||||||
ekkarill92 answered 2 years agoRelated Solutions
Problem 10-11 Direct Materials and Direct Labor Variances; Computations from Incomplete Data [LO10-1, LO10-2] Sharp Company...
Problem 10-11 Direct Materials and Direct Labor Variances;
Computations from Incomplete Data [LO10-1, LO10-2]
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
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Computations from Incomplete Data [LO10-1, LO10-2]
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
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Problem 10-11 Direct Materials and Direct Labor Variances; Computations from Incomplete Data [LO10-1, LO10-2] Sharp Company...
Problem 10-11 Direct Materials and Direct Labor Variances;
Computations from Incomplete Data [LO10-1, LO10-2]
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 $57,510, all of which were used in the production of 3,125 units
of product....
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Computations from Incomplete Data [LO9-4, LO9-5]
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 $56,610, all of which were used in the production of 2,875 units
of product....
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Computations from Incomplete Data [LO9-4, LO9-5]
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 $57,510, all of which were used in the production of 3,125 units
of product....
Problem 9-25 Direct Materials and Direct Labor Variances; Computations from Incomplete Data [LO9-4, LO9-5] Sharp Company...
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Computations from Incomplete Data [LO9-4, LO9-5]
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 $43,335, all of which were used in the production of 2,425 units
of product....
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