Question

Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing. Each of the products uses two raw materials—X442 and Y661. The company uses a standard cost system, with the following standards for each product (on a per unit basis): Raw Material Standard Labor Time Product X442 Y661 Sintering Finishing Alpha6 3.0 kilos 3.0 liters 0.30 hours 1.10 hours Zeta7 5.0 kilos 5.0 liters 0.40 hours 1.20 hours Information relating to materials purchased and materials used in production during May follows: Material Purchases Purchase Cost Standard Price Used in Production X442 15,300 kilos $44,370 $2.70 per kilo 9,800 kilos Y661 16,300 liters $26,080 $1.70 per liter 14,300 liters The following additional information is available: The company recognizes price variances when materials are purchased. The standard labor rate is $23.00 per hour in Sintering and $21.50 per hour in Finishing. During May, 1,320 direct labor-hours were worked in Sintering at a total labor cost of $32,340, and 2,980 direct labor-hours were worked in Finishing at a total labor cost of $70,030. Production during May was 1,900 Alpha6s and 900 Zeta7s. Required: 1. Complete the standard cost card for each product, showing the standard cost of direct materials and direct labor. 2. Compute the materials price and quantity variances for each material. 3. Compute the labor rate and efficiency variances for each operation.

Answer 1

Req 1		Standard Quantity or Hours	Standard price or RATE	Standard Cost
	Alpha 6:
	Direct Materials-X442	3.00	kilos	2.70	per kilo	8.10
	Direct Materials-Y661	3.00	liters	1.70	per liter	5.10
	Direct Labour-Sintering	0.30	hours	23.00	Per hour	6.90
	Direct Labour-Finishing	1.10	hours	21.50	Per hour	23.65
	Total					43.75
	Zeta 7:
	Direct Materials-X442	5.00	kilos	2.70	kilos	13.50
	Direct Materials-Y661	5.00	lites	1.70	lites	8.50
	Direct Labour-Sintering	0.40	hours	23.00	hours	9.20
	Direct Labour-Finishing	1.20	hours	21.50	hours	25.80
	Total					57.00
Req 2	Direct Material Variance-Material X442
	Material Price Variance	3060	Unfavorable	WN-1
	Material Quantity Variance	1080	Favorable	WN-2
	Direct Material Variance-Material Y661
	Material Price Variance	1630	Favorable	WN-1
	Material Quantity Variance	6970	Unfavorable	WN-2
	Working Note 1:
		Material X442	Material Y661
	Standard Price	2.7	1.7
	Actual price	2.9	1.6	(Actual cost/actual qty purchased)
	AQ Purchases	15300	16300
	Material price variance = [SP-AP] x AQ purchased
	Material Price Variance	3060	1630
	Favourable/Unfavourable	Unfavorable	Favorable
	Working Note 2:
		Material X442	Material Y661
	Standard Qty	10200	10200	(Actual units alpha* standard mat req + actual units zeta * standard mat req)
	Actual Qty Used	9800	14300
	Standard price	2.7	1.7
	Material quantity variance = [SQ-AQ used] x SP
	Material quantity variance	1080	6970
	Favourable/Unfavourable	Favorable	Unfavorable
Req 3
	Direct Labor Variance-Sintering:
	Labor Rate variance	1980	Unfavorable	WN-3
	Labor Efficiency variance	8970	Unfavorable	WN-4
	Direct Labor Variance-Finishing:
	Labor Rate variance	5960	Unfavorable	WN-3
	Labor Efficiency variance	4085	Favorable	WN-4
	Working Note 3:
		Sintering	Finishing
	Standard rate	23.0	21.5
	Actual rate	24.5	23.5	(Total labor cost/hours worked)
	Actual Hours worked	1320	2980
	Direct labor rate variance = [SR-AR] x AH worked
	Direct labor rate variance	1980	5960
	Favourable/Unfavourable	Unfavorable	Unfavorable
	Working Note 4:
	ekkarill92 Next > < Previous Related Solutions Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing.... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing. Each of the products uses two raw materials—X442 and Y661. The company uses a standard cost system, with the following standards for each product (on a per unit basis): Raw Material Standard Labor Time Product X442 Y661 Sintering Finishing Alpha6 2.0 kilos 1.5 liters 0.10 hours 1.00 hours Zeta7 3.0 kilos 4.5 liters 0.30 hours 0.80 hours Information relating to materials purchased and materials... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing.... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing. Each of the products uses two raw materials—X442 and Y661. The company uses a standard cost system, with the following standards for each product (on a per unit basis): Raw Material Standard Labor Time Product X442 Y661 Sintering Finishing Alpha6 2.0 kilos 1.5 liters 0.10 hours 0.80 hours Zeta7 3.0 kilos 2.5 liters 0.45 hours 0.90 hours Information relating to materials purchased and materials... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing.... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing. Each of the products uses two raw materials—X442 and Y661. The company uses a standard cost system, with the following standards for each product (on a per unit basis): Raw Material Standard Labor Time Product X442 Y661 Sintering Finishing Alpha6 2.0 kilos 1.5 liters 0.10 hours 1.00 hours Zeta7 3.0 kilos 4.5 liters 0.30 hours 0.80 hours Information relating to materials purchased and materials... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing.... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing. Each of the products uses two raw materials—X442 and Y661. The company uses a standard cost system, with the following standards for each product (on a per unit basis): Raw Material Standard Labor Time Product X442 Y661 Sintering Finishing Alpha6 3.0 kilos 2.0 liters 0.40 hours 1.00 hours Zeta7 5.0 kilos 5.0 liters 0.50 hours 1.20 hours Information relating to materials purchased and materials... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing.... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing. Each of the products uses two raw materials, X442 and Y661. The company uses a standard cost system, with the following standards for each product (on a per unit basis):    Raw Material Standard Labor Time Product X442 Y661 Sintering Finishing     Alpha6 3.0 kilos 2.0 liters 0.40 hours 1.00 hours     Zeta7 5.0 kilos 5.0 liters 0.50 hours 1.20 hours    Information relating to materials... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing.... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing. Each of the products uses two raw materials—X442 and Y661. The company uses a standard cost system, with the following standards for each product (on a per unit basis): Raw Material Standard Labor Time Product X442 Y661 Sintering Finishing Alpha6 2.5 kilos 2.5 liters 0.40 hours 1.20 hours Zeta7 4.5 kilos 5.5 liters 0.40 hours 0.80 hours Information relating to materials purchased and materials... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing.... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing. Each of the products uses two raw materials—X442 and Y661. The company uses a standard cost system, with the following standards for each product (on a per unit basis): Raw Material Standard Labor Time Product X442 Y661 Sintering Finishing Alpha6 2.5 kilos 2.5 liters 0.20 hours 0.90 hours Zeta7 4.5 kilos 3.5 liters 0.30 hours 1.20 hours Information relating to materials purchased and materials... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing.... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing. Each of the products uses two raw materials—X442 and Y661. The company uses a standard cost system, with the following standards for each product (on a per unit basis): Raw Material Standard Labor Time Product X442 Y661 Sintering Finishing Alpha6 2.5 kilos 2.5 liters 0.40 hours 0.90 hours Zeta7 4.5 kilos 4.5 liters 0.35 hours 0.80 hours Information relating to materials purchased and materials... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing.... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing. Each of the products uses two raw materials—X442 and Y661. The company uses a standard cost system, with the following standards for each product (on a per unit basis): Raw Material Standard Labor Time Product X442 Y661 Sintering Finishing Alpha6 1.5 kilos 2.5 liters 0.20 hours 0.90 hours Zeta7 3.5 kilos 3.5 liters 0.35 hours 0.80 hours Information relating to materials purchased and materials... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing.... Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing. Each of the products uses two raw materials, X442 and Y661. The company uses a standard cost system, with the following standards for each product (on a per unit basis):    Raw Material Standard Labor Time Product X442 Y661 Sintering Finishing     Alpha6 2.0 kilos 1.4 liters 0.50 hours 0.90 hours     Zeta7 4.0 kilos 3.4 liters 0.10 hours 0.90 hours    Information relating to materials... 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