Direct Materials and Direct Labor Variance Analysis Best Faucet Company manufactures faucets in a small manufacturing...

Direct Materials and Direct Labor Variance Analysis

Best Faucet Company manufactures faucets in a small manufacturing facility. The faucets are made from zinc. Manufacturing has 30 employees. Each employee presently provides 40 hours of labor per week. Information about a production week is as follows:

Standard wage per hour	$17.4
Standard labor time per faucet	15 min.
Standard number of lbs. of zinc	2.1 lbs.
Standard price per lb. of zinc	$12.25
Actual price per lb. of zinc	$12.5
Actual lbs. of zinc used during the week	19,500 lbs.
Number of faucets produced during the week	9,000
Actual wage per hour	$17.9
Actual hours per week	1,200 hrs.

Required:

a. Determine the standard cost per faucet for direct materials and direct labor. Round the cost per unit to two decimal places.

Direct materials standard cost per faucet	$
Direct labor standard cost per faucet	$
Total standard cost per faucet	$

b. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Price variance	$	Unfavorable
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. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Rate variance	$	Unfavorable
Time variance	$	Favorable
Total direct labor cost variance	$	Favorable

Solutions

Expert Solution

Answer a.

Direct Material - Zinc - 2.1 lbs X $12.25	25.73
Direct Labor - 0.25 hr X $17.40	4.35
Total Standard Cost per Faucet	30.08


Answer b.

Direct Material Price Variance = (SR - AR) X AQ
Direct Material Price Variance = ($12.25 - $12.50) X 19,500 lbs
Direct Material Price Variance = $4,875 (U)


Direct Material Quantity Variance = (SQ - AQ) X SR
Direct Material Quantity Variance = (18,900 lbs - 19,500 lbs) X $12.25
Direct Material Quantity Variance = $7,350 (U)


Direct Material Price Variance	4,875	(U)
Direct Material Quantity Variance	7,350	(U)
Direct Material Cost Variance	12,225	(U)


Answer c.

Direct Labor Rate Variance = (SR - AR) X AH
Direct Labor Rate Variance = ($17.40 - $17.90) X 1,200 Hrs
Direct Labor Rate Variance = $600 (U)


Direct Labor Time Variance = (SH - AH) X SR
Direct Labor Time Variance = (2,250 Hrs - 1,200 Hrs) X $17.40
Direct Labor Time Variance = $18,270 (F)

Direct Labor Rate Variance	600	(U)
Direct Labor Time Variance	18,270	(F)
Direct Labor Cost Variance	17,670	(F)

ekkarill92 answered 9 months ago

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