Question

Stefani Company has gathered the following information about its product. Direct materials: Each unit of product contains 4.20 pounds of materials. The average waste and spoilage per unit produced under normal conditions is 0.70 pounds. Materials cost $1 per pound, but Stefani always takes the 2.00% cash discount all of its suppliers offer. Freight costs average $0.45 per pound. Direct labor. Each unit requires 1.60 hours of labor. Setup, cleanup, and downtime average 0.20 hours per unit. The average hourly pay rate of Stefani’s employees is $12.30. Payroll taxes and fringe benefits are an additional $2.40 per hour. Manufacturing overhead. Overhead is applied at a rate of $6.60 per direct labor hour. Compute Stefani’s total standard cost per unit. (Round answer to 2 decimal places, e.g. 1.25.) Total standard cost per unit $ Exercise 11-4 Monte Services, Inc. is trying to establish the standard labor cost of a typical brake repair. The following data have been collected from time and motion studies conducted over the past month. Actual time spent on the brake repairs 3.0 hour Hourly wage rate $12 Payroll taxes 15% of wage rate Setup and downtime 9% of actual labor time Cleanup and rest periods 25% of actual labor time Fringe benefits 25% of wage rate Determine the standard direct labor hours per brake repairs. (Round answer to 2 decimal places, e.g. 1.25.) Standard direct labor hours per brake repair hours LINK TO TEXT LINK TO TEXT Determine the standard direct labor hourly rate. (Round answer to 2 decimal places, e.g. 1.25.) Standard direct labor hourly rate $ LINK TO TEXT LINK TO TEXT Determine the standard direct labor cost per brake repair. (Round answer to 2 decimal places, e.g. 1.25.) Standard direct labor cost per brake repair $ LINK TO TEXT LINK TO TEXT If a brake repair took 3.60 hours at the standard hourly rate, what was the direct labor quantity variance? (Round answer to 2 decimal places, e.g. 1.25.) Direct labor quantity variance $

Answer 1

Stefani Company

Exercise 11-4 Monte Services, Inc.

Determine the standard direct labor hours per break repair

Actual time spent on the break repair = 3.0 hour
Setup and downtime = 9% of actual labor time
Cleanup and rest periods = 25% of actual labor time

Standard direct labor hours per break repair = 3 + (3 * 9%) + (3 * 25%)

                                                                             = 4.02 hours

Determine the standard direct labor hourly rate

Hourly wage rate = $12
Payroll taxes = 15% of wage rate
Fringe benefits = 25% of wage rate

standard direct labor hourly rate = 12 + (12 * 15%) + (12 * 25%)

                                                          = $16.8

Determine the standard direct labor cost per break repair

Standard direct labor cost per break repair = Hourly rate x number of hours.
                                                                          = $16.8 * 4.02 = $67.54

If a brake repair took 3.60 hours at the standard hourly rate, what was the direct labor quantity variance

Standard hours rate = $16.8 * 4.02
                                  = $67.54

Actual hours rate = $16.8 * 3.6
                            = $60.48

Direct labour quantity variance = 67.54 – 60.48 = $7.06