Question

Abbeville Fixture Company manufactures units in a small manufacturing facility. The units are made from brass. Manufacturing has 30 employees. Each employee presently provides 35 hours of labor per week. Information about a production week is as follows:

Standard wage per hour	$12
Standard labor time per unit	20 min.
Standard number of lbs. of brass	1.2 lbs.
Standard price per lb. of brass	$12.75
Actual price per lb. of brass	$13
Actual lbs. of brass used during the week	8,158 lbs.
Number of units produced during the week	6,600
Actual wage per hour	$12.36
Actual hours for the week (30 employees × 35 hours)	1,050 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	$	Unfavorable
Direct Materials Quantity Variance	$	Unfavorable
Total Direct Materials Cost Variance	$	Unfavorable

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	$	Unfavorable
Direct Labor Time Variance	$	Favorable
Total Direct Labor Cost Variance	$	Favorable

Answer 1

a) Calculation of Standard cost per unit (Amounts in $)

Direct materials standard cost per unit (1.2 lbs*$12.75)	15.30
Direct labor standard cost per unit [(20 min/60 min)*$12]	4.00
Total standard cost per unit ($15.30+$4.00)	19.30

b) Direct Materials Price Variance = (Std Price - Actual Price)Actual qty

= ($12.75 - $13)*8,158 lbs. = ($2,040) Unfavorable

Direct Materials Quantity Variance = (Std Qty - Actual Qty)*Std Price

= [(6,600 units*1.2 lbs) - 8,158 lbs]*$12.75

= (7,920 - 8,158)*$12.75 = ($3,034) Unfavorable

Direct Materials Price Variance	$2,040	Unfavorable
Direct Materials Quantity Variance	$3,034	Unfavorable
Total Direct Materials Cost Variance	$5,074	Unfavorable

c) Direct Labor Rate Variance = (Std Rate - Actual Rate)Actual Hours

= ($12 - $12.36)*1,050 hours = ($378) Unfavorable

Direct Labor Time Variance = (Std Hrs - Actual Hrs)*Std Rate

= {[6,600 units*(20 min/60 min)] - 1,050 hrs}*$12

= (2,200 hrs - 1,050 hrs)*$12 = $13,800 Favorable

Total Direct Labor Cost Variance = $13,800 Favorable - $378 Unfavorable = $13,422 Favorable

Direct Labor Rate Variance	$378	Unfavorable
Direct Labor Time Variance	-$13,800	Favorable
Total Direct Labor Cost Variance	-$13,422	Favorable