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 50 employees. Each employee presently provides 36 hours of labor per week. Information about a production week is as follows:

Standard wage per hour	$11.40
Standard labor time per faucet	20 min.
Standard number of lbs. of brass	1.5 lbs.
Standard price per lb. of brass	$11.75
Actual price per lb. of brass	$12.00
Actual lbs. of brass used during the week	12,515 lbs.
Number of faucets produced during the week	8,100
Actual wage per hour	$11.74
Actual hours for the week (50 employees × 36 hours)	1,800 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.	Standard labor time per unit in hours = 20 / 60 = 1 / 3 hours
	Direct materials standard cost per unit ( Standard number of lbs. of brass * Standard price per lb. of brass = 1.5 * 11.75 )	17.63
	Direct labor standard cost per unit ( Standard labor time per unit in hours * Standard wage per hour = (1/3) * 11.40 )	3.80
	Total standard cost per unit	21.43
b.	Direct materials price variance = ( Actual price - Standard price ) * Actual quantity = ( 12.00 -11.75 ) * 12515	3129	Unfavorable
	Standard quantity of direct materials for actual production = Number of units produced during the week * Standard number of lbs. of brass = 8100 * 1.5	12150
	Direct materials quantity variance = ( Actual quantity - Standard quantity ) * Standard price = ( 12515 - 12150 ) * 11.75	4289	Unfavorable
	Total direct materials cost variance = ( Actual quantity * Actual price ) - ( Standard quantity * Standard price ) = ( 12515 * 12.00 ) - ( 12150 * 11.75 )	7418	Unfavorable
c.	Direct labor rate variance = ( Actual rate - Standard rate ) * Actual hours = ( 11.74 - 11.40 ) * 1800	612	Unfavorable
	Standard hours for actual production = Number of units produced during the week * Standard labor hours per unit = 8100 * (1/3)	2700
	Direct labor time variance = ( Actual hours - Standard hours ) * Standard rate = ( 1800 - 2700 ) * 11.40	-10260	Favorable
	Total direct labor cost variance = ( Actual hours * Actual rate ) - ( Standard hours * Standard rate ) = ( 1800 * 11.74 ) - ( 2700 * 11.40 )	-9648	Favorable