In: Accounting
Exercise 08-12 Direct materials and direct labor variances LO P3
Reed Corp. has set the following standard direct materials and
direct labor costs per unit for the product it
manufactures.
Direct materials (16 lbs. @ $3 per lb.) | $48 | |||
Direct labor (2 hrs. @ $15 per hr.) | 30 | |||
During June the company incurred the following actual costs to
produce 8,400 units.
Direct materials (137,300 lbs. @ $2.80 per lb.) | $ | 384,440 | ||
Direct labor (20,600 hrs. @ $15.15 per hr.). | 312,090 | |||
AH = Actual Hours
SH = Standard Hours
AR = Actual Rate
SR = Standard Rate
AQ = Actual Quantity
SQ = Standard Quantity
AP = Actual Price
SP = Standard Price
(1) Compute the direct materials price and
quantity variances. (Indicate the effect of each variance
by selecting for favorable, unfavorable, and no
variance.)
(2) Compute the direct labor rate variance and the
direct labor efficiency variance. (Indicate the effect of
each variance by selecting for favorable, unfavorable, and no
variance.)
Material Variances | ||||||||||||
WORKING NOTES: | Actual output = | 8400 | ||||||||||
Standard Cost Per Unit | Standard Cost for Actual Output | Actual Cost | ||||||||||
Standard Quantity | SP | Standard Cost | Standard Quantity | SP | Standard Cost | Actual Quantity | AP | Actual Cost | ||||
16.00 | $ 3.00 | $ 48.00 | 134400 | $ 3.00 | $ 403,200 | 137300 | $ 2.80 | $ 384,440 | ||||
Lbs | (8400 X 16) | |||||||||||
SOLUTION : 1(1) | ||||||||||||
Direct Material price Variance = ( | Standard Price | - | Actual Price | ) "X" | Actual Quantity | |||||||
Direct Material price Variance = ( | $ 3.00 | - | $ 2.80 | ) "X" | 137300 | |||||||
Direct Material price Variance = | $ 0.20 | "X" | 137300 | |||||||||
Direct Material price Variance = | $ 27,460 | Favourable | ||||||||||
SOLUTION : 1(2) | ||||||||||||
Material Quantity Variance = ( | Actual Quantity | - | Standard Quantity | ) "X" | Standard Cost per unit | |||||||
Material Quantity Variance = ( | 137,300 | - | 134,400 | ) "X" | $ 3.00 | |||||||
Material Quantity Variance = | 2,900 | "X" | $ 3.00 | |||||||||
Material Quantity Variance = | $ 8,700 | Unfavourable | ||||||||||
Answer = | ||||||||||||
Direct Material price Variance = | 27,460 | Favourable | ||||||||||
Direct Material Quantity Variance = | 8,700 | Unfavourable | ||||||||||
Labour Variances | ||||||||||||
Standard Cost Per unit | Standard Cost for Actual Production | Actual Units = | 8400 | |||||||||
Standard Time | Std. Rate | Total Cost | Standard Time | Std. Rate | Total Std. Cost | Actual Time | Act. Rate | Actual Cost | ||||
2.00 | $ 15.00 | $ 30.00 | 16800 | $ 15.00 | $ 252,000 | 20600 | $ 15.15 | $ 312,090 | ||||
Hours | Per Hours | (2 Hrs X 8400) | Per Hours | Hrs. | Per Hours | |||||||
SOLUTION : 2 (1) | ||||||||||||
Labour Rate Variance = ( Actual Rate ' -' Standard Rate ) X Actual Hours | ||||||||||||
Labour Rate Variance = ( | $ 15.15 | '-' | $ 15.00 | ) X | 20,600 | |||||||
Labour Rate Variance = | $ 0.15 | X | 20,600 | |||||||||
Labour Rate Variance = | 3090 | Unfavorable | ||||||||||
SOLUTION : 2(2) | ||||||||||||
Related SolutionsExercise 21-12 Direct materials and direct labor variances LO P2 Reed Corp. has set the following...Exercise 21-12 Direct materials and direct labor variances LO
P2
Reed Corp. has set the following standard direct materials and
direct labor costs per unit for the product it
manufactures.
Direct materials (15 lbs. @ $3 per lb.)
$45
Direct labor (3 hrs. @ $14.00 per hr.)
42
During June the company incurred the following actual costs to
produce 8,500 units.
Direct materials (130,400 lbs. @ $2.75 per lb.)
$
358,600
Direct labor (29,900 hrs. @ $14.15 per hr.).
423,085...
Ex 23-12 Reed Corp. has set the following standard direct materials and direct labor costs per...
Ex
23-12 Reed Corp. has set the following standard direct materials
and direct labor costs per unit for the product it
manufactures.
Element
Qty per
Qty Measure
Cost per Qty
Total Cost
Direct Materials
10
Pounds
$3.00
$30
Direct Labor
2
Hours
$12.00
$24
During June the company
incurred the following actual costs to produce 9,000 units.
Element
Qty per
Qty Measure
Cost per Qty
Total Cost
Direct Materials
92,000
Pounds
$2.95
$271,400
Direct Labor
18,800
Hours
$12.05
$226,540
Compute...
Reed Corp. has set the following standard direct materials and direct labor costs per unit for...Reed Corp. has set the following standard direct materials and
direct labor costs per unit for the product it
manufactures.
Direct materials (15 lbs. @ $4 per lb.)
$60
Direct
labor (3 hrs. @ $15 per hr.)
45
During June the company incurred the following actual costs to
produce 8,500 units.
Direct materials (130,400 lbs. @ $3.70 per lb.)
$
482,480
Direct
labor (29,700 hrs. @ $15.15 per hr.).
449,955
AQ = Actual Quantity
SQ = Standard Quantity
AP =...
Direct Materials and Direct Labor VariancesThe following information is for the standard and actual costs for the Happy Corporation.Standard Costs:Budgeted units of production - 16,000 (80% of capacity)Standard labor hours per unit - 4Standard labor rate - $26 per hourStandard material per unit - 8 lbs.Standard material cost - $ 12 per poundStandard variable overhead rate - $15 per labor hourBudgeted fixed overhead - $640,000Fixed overhead rate is based on budgeted labor hours at 80% capacity.Actual Cost:Actual production - 16,500 unitsActual material purchased and used...
Hutto Corp. has set the following standard direct materials and direct labor costs per unit for...Hutto Corp. has set the following standard direct materials and
direct labor costs per unit for the product it manufactures. Direct
materials (15 lbs. @ $4 per lb.) $60 Direct labor (4 hrs. @ $14 per
hr.) 56 During May the company incurred the following actual costs
to produce 8,200 units. Direct materials (125,700 lbs. @ $3.80 per
lb.) $ 477,660 Direct labor (36,900 hrs. @ $14.10 per hr.). 520,290
AH = Actual Hours SH = Standard Hours AR =...
Hutto Corp. has set the following standard direct materials and direct labor costs per unit for...Hutto Corp. has set the following standard direct materials and
direct labor costs per unit for the product it
manufactures.
Direct materials (16 lbs. @ $4 per lb.)
$64
Direct labor (3 hrs. @ $15 per hr.)
45
During May the company incurred the following actual costs to
produce 8,600 units.
Direct materials (139,900 lbs. @ $3.80 per lb.)
$
531,620
Direct labor (29,100 hrs. @ $15.10 per hr.).
439,410
AQ = Actual Quantity
SQ = Standard Quantity
AP =...
Hutto Corp. has set the following standard direct materials and direct labor costs per unit for...Hutto Corp. has set the following standard direct materials and
direct labor costs per unit for the product it manufactures.
Direct materials (15 lbs. @ $4
per lb.)
$60
Direct labor (3 hrs. @ $14 per
hr.)
42
During May the company incurred the following actual costs to
produce 8,400 units.
Direct materials (129,900 lbs. @
$3.80 per lb.)
$
493,620
Direct labor (28,300 hrs. @
$14.10 per hr.).
399,030
AQ = Actual Quantity
SQ = Standard Quantity
AP =...
Hutto Corp. has set the following standard direct materials and direct labor costs per unit for...Hutto Corp. has set the following standard direct materials and
direct labor costs per unit for the product it
manufactures.
Direct materials (15 lbs. @ $3 per lb.)
$45
Direct labor (3 hrs. @ $16 per hr.)
48
During May the company incurred the following actual costs to
produce 8,800 units.
Direct materials (135,000 lbs. @ $2.80 per lb.)
$
378,000
Direct labor (29,700 hrs. @ $16.10 per hr.).
478,170
AH = Actual Hours
SH = Standard Hours
AR =...
Hutto Corp. has set the following standard direct materials and direct labor costs per unit for...Hutto Corp. has set the following standard direct materials and
direct labor costs per unit for the product it
manufactures.
Direct materials (15 lbs. @ $3 per lb.)
$45
Direct labor (2 hrs. @ $15 per hr.)
30
During May the company incurred the following actual costs to
produce 8,400 units.
Direct materials (129,400 lbs. @ $2.80 per lb.)
$
362,320
Direct labor (20,500 hrs. @ $15.10 per hr.).
309,550
AH = Actual Hours
SH = Standard Hours
AR =...
Hutto Corp. has set the following standard direct materials and direct labor costs per unit for...Hutto Corp. has set the following standard direct materials and
direct labor costs per unit for the product it
manufactures.
Direct materials (14 lbs. @ $4 per lb.)
$56
Direct labor (3 hrs. @ $16 per hr.)
48
During May the company incurred the following actual costs to
produce 8,100 units.
Direct materials (116,300 lbs. @ $3.80 per lb.)
$
441,940
Direct labor (28,900 hrs. @ $16.10 per hr.).
465,290
AQ = Actual Quantity
SQ = Standard Quantity
AP =...
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