Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass throug
ID: 2431867 • Letter: M
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):
Information relating to materials purchased and materials used in production during May follows:
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
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 hoursExplanation / Answer
Alpha8 Std qty or hrs Std Price or rate Std cost Direct Materials X442 3 2.7 8.1 Direct Materials Y661 3 1.7 5.1 Direct Materials Sintering 0.3 23 6.9 Direct Materials Finishing 1.1 21.5 23.65 Total Cost 43.75 Zeta9 Std qty or hrs Std Price or rate Std cost Direct Materials X442 5 2.7 13.5 Direct Materials Y661 5 1.7 8.5 Direct Materials Sintering 0.4 23 9.2 Direct Materials Finishing 1.2 21.5 25.8 Total Cost 57 Materials Price Variance (Actual Unit cost - Standard Unit cost)*Actual Qty purchased X442 44370/15300 2.9 (2.9-2.7)*15300 3060 U Y661 26080/16300 1.6 (1.6-1.7)*16300 -1630 F Material Qty Variance (Actual Qty- Std Qty)*Std Rate X442 (9800-10200)*2.7 -1080 F Material Required for Alpha6s 1900*3 5700 Material Required for Zeta9 900*5 4500 10200 Y661 (14300-10200)*1.7 6970 U Material Required for Alpha6s 1900*3 5700 Material Required for Zeta9 900*5 4500 10200 Labor Rate Variance (Actual labor cost - Standard labor cost)*Actual Labor hours Sintering 32340/1320 24.5 (24.50-23)*1320 1980 U Finishing 70030/2980 23.5 (23.50-21.50)*2980 5960 U Labor Efficiency Variance (Actual Hrs- Std Hrs)*Std Rate Sintering Labor Hrs Required for Alpha6s (1900*0.30) 570 Labor Hrs Required for Zeta9 (900*0.40) 360 930 (1320-930)*23 8970 U Finishing Labor Hrs Required for Alpha6s (1900*1.10) 2090 Labor Hrs Required for Zeta9 (900*1.20) 1080 3170 (2980-3170)*21.50 -4085 F
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