Question

1. 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 30 employees. Each employee presently provides 36 hours of labor per week. Information about a production week is as follows:

   Standard wage per hour	$15.00
   Standard labor time per faucet	20 min.
   Standard number of lbs. of brass	1.3 lbs.
   Standard price per lb. of brass	$12.25
   Actual price per lb. of brass	$12.50
   Actual lbs. of brass used during the week	10,444 lbs.
   Number of faucets produced during the week	7,800
   Actual wage per hour	$15.45
   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

• Requirement [a]

Direct materials standard cost per unit [1.3 lbs x $ 12.25]	$ 15.93
Direct labor standard cost per unit [(20 min /60min) x $15 per hr]	$ 5.00
Total standard cost per unit	$ 20.93

• Requirement [b]

Direct Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                              12.25	-	$                    12.50	)	x	10444
	-2611
	Variance		$              2,611.00			Unfavourable-U
Direct Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	10140	-	10444	)	x	$                        12.25
	-3724
	Variance		$              3,724.00			Unfavourable-U
Total Direct Material Cost Variance
(	Standard Cost	-	Actual Cost	)
(	$                   124,215.00	-	$          130,550.00	)
	-6335
	Variance		$              6,335.00			Unfavourable-U

• Requirement [c]

Direct Labor Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$                              15.00	-	$                    15.45	)	x	1080
	-486
	Variance		$                  486.00			Unfavourable-U
Direct Labour Time Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	2600	-	1080	)	x	$                        15.00
	22800
	Variance		$            22,800.00			Favourable-F [Enter as NEGATIVE]
Total Direct Labor Cost Variance
(	Standard Cost	-	Actual Cost	)
(	$                      39,000.00	-	$            16,686.00	)
	22314
	Variance		$            22,314.00			Favourable-F [Enter as NEGATIVE]