Question

Best Faucet Company manufactures faucets in a small manufacturing facility. The faucets are made from zinc. Manufacturing has 60 employees. Each employee presently provides 40 hours of labor per week. Information about a production week is as follows:

Standard wage per hour	$13.8
Standard labor time per faucet	15 min.
Standard number of lbs. of zinc	2.1 lbs.
Standard price per lb. of zinc	$9.5
Actual price per lb. of zinc	$9.75
Actual lbs. of zinc used during the week	14,900 lbs.
Number of faucets produced during the week	6,900
Actual wage per hour	$14.2
Actual hours per week	2,400 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

• All working forms part of the answer
• Requirement 1

Direct materials standard cost per faucet	[2.1 lbs x $9.5 per lb]	$19.95
Direct labor standard cost per faucet	[15 min x $13.8/60]	$3.45
Total standard cost per faucet	[19.95 + 3.45]	$23.4

• Working for variances

Actual data and standard data for 6900 faucets

Actual DATA for		6900	units
	Quantity (AQ)	Rate (AR)	Actual Cost
Direct Material	14900	$              9.750	$       1,45,275.00
Direct labor	2400	$              14.20	$           34,080.00
Standard DATA for		6900	units
	Quantity (SQ)	Rate (SR)	Standard Cost
Direct Material	14490	$                9.50	$       1,37,655.00
Direct labor	1725	$              13.80	$           23,805.00

• Requirement ‘b’ and ‘c’

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                 9.50	-	$                 9.75	)	x	14900
	-3725
	Variance		3725			Unfavourable-U
Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	14490	-	14900	)	x	$                           9.50
	-3895
	Variance		3895			Unfavourable-U
Material Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$   1,37,655.00	-	$   1,45,275.00	)
	-7620
	Variance		7620			Unfavourable-U
Labor Rate Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Labor Hours
(	$               13.80	-	$               14.20	)	x	2400
	-960
	Variance		960			Unfavourable-U
Labour Efficiency Variance
(	Standard Hours	-	Actual Hours	)	x	Standard Rate
(	1725	-	2400	)	x	$                        13.80
	-9315
	Variance		9315			Unfavourable-U
Labor Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$      23,805.00	-	$      34,080.00	)
	-10275
	Variance		10275			Unfavourable-U