Question

The standard costs for a unit of Dandy? follow:

Direct materials (2 lb. at $7 per lb.)	$14.00
Direct manufacturing labor (1/2 hour at $20 per hour)	10.00
Manufacturing overhead (80% of direct manufacturing labor costs)	8.00
	$32.00

The following data were obtained fromLowell: Lowell?'srecords for the month of? May:

	Debit	Credit
Revenues		$160,000
Accounts payable control (for May's purchases of direct materials)		78,400
Direct materials price variance	$3,750
Direct materials efficiency variance	2,600
Direct manufacturing labor price variance	2,000
Direct manufacturing labor efficiency variance		2,000

Actual production in May was 5,000 units of? Dandy, and actual sales in May were 3,200 units. The amount shown for direct materials price variance applies to materials purchased during May. There was no beginning inventory of materials on May? 1,2017.

Compute each of the following for May (Show computations)

1) Standard direct anuf allowed for actual output produced

2) actual direct manufacturing labor hours worked

3) actual direct manufacturing labor wage rate

4) standard quantity of dm allowed in pounds

5) actual quanitity of dm used in pounds

6) actual quantity of dm purchased in pounds

7) Actual dm price per pound.

Answer 1

1)Standard direct labor allowed for actual output =Actual output *standard hours

                             = 5000 * 1/2

                             = 2500 hours

2)actual direct manufacturing labor hours worked :

Labor efficiency variance =SR[AH-SH]

-2000 = 20 [AH - (5000*1/2)]

-2000/20 =[AH - 2500]

   - 100=AH -2500

AH =2500-100= 2400hours

Actual hours worked : 2400 hours

3)Labor rate variance =AH[AR-SR]

   2000 = 2400[AR- 20]

2000/2400 = AR -20

   .83= AR-20

AR = .83+20 =$ 20.83 PER HOUR

4)standard quantity of dm allowed in pounds = actual output *SQ

                           = 5000*2 = 10000Ib