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Question: Direct Materials and Direct Labor Variance Analysis Abbeville Fixture Company manufactures units ...

Direct Materials and Direct Labor Variance Analysis

Abbeville Fixture Company manufactures units in a small manufacturing facility. The units are made from brass. Manufacturing has 40 employees. Each employee presently provides 36 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	1.8 lbs.
Standard price per lb. of brass	$12.25
Actual price per lb. of brass	$12.5
Actual lbs. of brass used during the week	12,793 lbs.
Number of units produced during the week	6,900
Actual wage per hour	$12.36
Actual hours for the week (40 employees × 36 hours)	1,440 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
	Direct materials standard cost per unit	$21.60	($12.00 × 1.8 lbs.)
	Direct labor standard cost per unit	$4	$12× (20 min./60 min.)
	Total standard cost per unit	$25.60
B
(i)	Direct Materials Price Variance
	(actual price - standard price) x actual quantity
	($13-$12)12793lbs
	= 12793 Unfavourable
(ii)	Direct materials quantity variance =
	(Actual quantity - standard quantity) x standard price
	(12793-1.8*6900)$12
	4476	Unfavourable
(iii)	Total direct materials cost variance =
	Direct materials price variance + Direct materials quantity variance
	(12793 + 476) unfavourable
	=17269 Unfavourable
C
(i)	Direct labor rate variance
	= (Actual rate per hour - standard rate per hour) x actual hours
	=(12.36-12)1440
	518.4	Unfavourable
(ii)	Direct labor time variance=
	(Actual direct labor hours - standard direct labor hours) x standard rate per hour
	(1440-6900*20min/60min)*$12 per hr
	(1440-2300)*12
	10320 Favourable
(iii)	Total direct labor cost variance =
	direct labor rate variance + direct labor time variance
	=518.40 U + 10320F
	9801.60F