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	1.2 kilos	2.0 liters		0.40 hours	0.80 hours
Zeta7	3.0 kilos	4.0 liters		0.10 hours	0.60 hours

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

Material	Purchases		Purchase Cost	Standard Price		Used in Production
X442	14,500	kilos	$60,900	$4.00	per kilo	9,000	kilos
Y661	15,500	liters	$27,900	$1.90	per liter	13,500	liters

The following additional information is available:

The company recognizes price variances when materials are purchased.

The standard labor rate is $21.00 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 $28,750, and 2,900 direct labor-hours were worked in Finishing at a total labor cost of $62,350.

Production during May was 2,000 Alpha6s and 2,250 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 o

• Req 1
• Req 2
• Req 3

Complete the standard cost card for each product, showing the standard cost of direct materials and direct labor. (Round your answers to 2 decimal places.)

Standard Quantity or Hours Standard Price or Rate Standard Cost Alpha6: Direct materials-X442 kilos per kilo Direct materials-Y661 liters per liter Direct labor-Sintering hours per hour Direct labor-Finishing hours per hour Total $0.00 Zeta7: Direct materials-X442 kilos per kilo Direct materials-Y661 liters per liter Direct labor-Sintering hours per hour Direct labor-Finishing hours per hour Total $0.00

peration.

• Req 1
• Req 2
• Req 3

Compute the materials price and quantity variances for each material. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

	Direct Materials Variances—Material X442: Materials price variance Materials quantity variance Direct Materials Variances—Material Y661: Materials price variance Materials quantity variance

Compute the labor rate and efficiency variances for each operation. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

	Direct Labor Variances—Sintering: Labor rate variance Labor efficiency variance Direct Labor Variances—Finishing: Labor rate variance Labor efficiency variance

Answer 1

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								Working for Variance
1 Standard Cost Card								Total Standard Quantity
		Standard Quantity or Hours		Standard Price or Rate		Standard Cost		Alpha	Zeta
	Alpha6:							2000	2250
	Direct Material X442	1.2	kilos	4	per kilo	4.8		2400
	Direct Material Y661	2	liters	1.9	per liter	3.8		4000
	Direct Labor-Sintering	0.4	Hour	21	per hour	8.4		800
	Direct Labor-Finishing	0.8	Hour	19.5	per hour	15.6		1600
	Total					32.6
	Zeta7:
	Direct Material X442	3	kilos	4	per kilo	12			6750
	Direct Material Y661	4	liters	1.9	per liter	7.6			9000
	Direct Labor-Sintering	0.1	Hour	21	per hour	2.1			225
	Direct Labor-Finishing	0.6	Hour	19.5	per hour	11.7			1350
	Total					33.4
Direct Material Variance X442:
Material Price Variance	(AP-SP)*AQ
	((60900/14500)-4)*(14500)	2900 U
Material Quantity Variance	(AQ-SQ)*SR
	(9000-(2400+6750))*4	600 F
Direct Material Variance Y661:
Material Price Variance	(AP-SP)*AQ
	((27900/15500)-1.9)*(15500)	1550 F
Material Quantity Variance	(AQ-SQ)*SR
	(13500-(4000+9000))*1.9	950 U
Direct Labor Variance-Sintering
Labor Rate Variance	(AR-SR)*AQ
	((28750/1250)-21)*(1250)	2500 U
Labor Efficiency Variance	(AQ-SQ)*SR
	(1250-(800+225))*21	4725 U
Direct Labor Variance-Finishing
Labor Rate Variance	(AR-SR)*AQ
	((62350/2900)-19.5)*(2900)	5800 U
Labor Efficiency Variance	(AQ-SQ)*SR
	(2900-1600+1350))*19.5	975 F