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

Answer a)

Direct materials standard cost per unit	15.3	[1.2 lbs/unit * $ 12.75/lbs]
Direct labor standard cost per unit	4	[$12/hour * 20/60]
Total Standard Cost per unit	19.3

Answer b)

Material Quantity Variance = Standard Price of Material per unit* ( Standard Quantity allowed - Actual Quantity Utilised)

= 12.75 (7920-8158)

= -3034.50 i.e. 3034.50 Unfavourable

Material Spending Variance = Actual Quantity * ( Standard Rate - Actual Rate)

= 8158 ( 12.75-13)

= -2039.50 i.e. 2039.50 Unfavourable

Total Direct Materials Cost Variance = Material Quantity Variance + Material Spending Variance

= (-3034.50) + (-2039.50)

= - 5074 i.e. 5074 Unfavourable

Answer C)

Labour Rate Variance = Actual Labour Hours (Standard Rate - Actual Rate)

= 1050 (12-12.36)

= -378 i.e. 378 Unfavourable

Labour Time Variance = Standard Rate (Standard Hours allowed - Actual Hours Used)

= 12 ( 2200-1050)

= 13800 Favourable

Total Direct Labor Cost Variance = Labour Rate Variance + Labour Time Variance

= -378+13800

=13,422 Favourable