Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass throug

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 X442 2.0 kilos 4.0 kilos Y661 3.4 liters 5.0 liters Sintering 0.20 hours 0.25 hours Finishing 0.80 hours 0.90 hours Product Alpha6 Zeta7 Information relating to materials purchased and materials used in production during May follows: Purchase Cost Standard Price Used in Production Material X442 Y661 Purchases 15,900 kilos$55,650 $3.30 per kilo 16,900 liters $23,660 $1.50 per liter 10,400 kilos 15,800 liters The following additional information is available:

Explanation / Answer

Std Qty or Hrs

Std Price or Rate

Standard Cost

Alpha 6:

Direct Materials-X442

2 kilos

3.30 per kilo

6.60

Direct Materials-Y661

3.4 litres

1.50 per litre

5.10

Direct Labour-Sintering

0.20 hrs

22 per hr

4.40

Direct Labour-Finishing

0.80 hrs

20.50 per hr

16.40

Total

32.50

Zeta 7:

Direct Materials-X442

4 kilos

3.30 per kilo

13.20

Direct Materials-Y661

5 litres

1.50 per litre

7.50

Direct Labour-Sintering

0.25 hrs

22 per hr

5.50

Direct Labour-Finishing

0.90 hrs

20.50 per hr

18.45

Total

44.65

Material Price & Quantity Variance :-

Direct Materials Variance-X4442:

Material Price Variance

3180 (U)

Material Quantity variance

660 (F)

Direct Materials Variance-Y661:

Material Price Variance

1690 (U)

Material Quantity variance

420 (U)

X4442:-

Material Price Variance = (SR – AR) * A Qty purchased

AR = 55650/15900 = $3.50

(3.30 – 3.50) * 15900 = $3180 (U)

Material Qty Variance = (SQ – AQ used) * SR

SQ = Alpha = 2 kilo * 2500 = 5000

         Zeta = 4 kilo * 1400 = 5600

SQ total = 10600

AQ used = 10400

Variance = (10600 – 10400) * 3.30 = $660 (F)

Y661:-

Material Price Variance = (SR – AR) * A Qty purchased

AR = 23660/16900 = $1.40

(1.40 – 1.50) * 16900 = $1690 (U)

Material Qty Variance = (SQ – AQ used) * SR

SQ = Alpha = 3.4 kilo * 2500 = 8500

         Zeta = 5 kilo * 1400 = 7000

SQ total = 15500

AQ used = 15800

Variance = (15500 – 15800) * 1.40 = $420 (U)

Labour Rate & Efficiency Variance :-

Direct Labour Variances-Sintering:

Labour Rate Variance

3120 (U)

Labour Efficiency Variance

9900 (U)

Direct Labour Variances-Finishing:

Labour Rate Variance

6080 (U)

Labour Efficiency Variance

4510 (F)

Sintering:-

Labour Rate variance = (SR – AR) * A Hrs

AR = 31720/1300 = 24.40

SR = 22

(22 – 24.40) * 1300 = 3120 (U)

Labour Efficiency Variance = (S Hrs – A Hrs) * SR

S Hrs = Alpha = 0.20 hrs * 2500 = 500

             Zeta = 0.25 * 1400 = 350

      Total Std Hrs = 850

Variance = (850 – 1300) * 22 = $9900 (U)

Finishing:-

Labour Rate variance = (SR – AR) * A Hrs

AR = 68400/3040 = 22.50

SR = 20.50

(20.50 – 22.50) * 3040 = 6080 (U)

Labour Efficiency Variance = (S Hrs – A Hrs) * SR

S Hrs = Alpha = 0.80 hrs * 2500 = 2000

             Zeta = 0.90 * 1400 = 1260

      Total Std Hrs = 3260

Variance = (3260 – 3040) * 20.50 = $4510 (F)

Std Qty or Hrs

Std Price or Rate

Standard Cost

Alpha 6:

Direct Materials-X442

2 kilos

3.30 per kilo

6.60

Direct Materials-Y661

3.4 litres

1.50 per litre

5.10

Direct Labour-Sintering

0.20 hrs

22 per hr

4.40

Direct Labour-Finishing

0.80 hrs

20.50 per hr

16.40

Total

32.50

Zeta 7:

Direct Materials-X442

4 kilos

3.30 per kilo

13.20

Direct Materials-Y661

5 litres

1.50 per litre

7.50

Direct Labour-Sintering

0.25 hrs

22 per hr

5.50

Direct Labour-Finishing

0.90 hrs

20.50 per hr

18.45

Total

44.65

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.