10 Check my work Problem 10-11 Direct Materials and Direct Labor Variances; Comp

Question

10 Check my work Problem 10-11 Direct Materials and Direct Labor Variances; Computations from Incomplete Data LO10-1, LO10-2 Sharp Company manufactures a product for which the following standards have been set Standard Standard Quantity or Hours 3 feet ? hours Standar Price or Rate Cost nt $5 per foot $15 Direct materials Direct labor ? per hour During March, the company purchased direct materials at a cost of $64,440, all of which were used in the production of 3,500 units of product. In addition, 5,000 direct labor-hours were worked on the product during the month. The cost of this labor time was $47,500. The following variances have been computed for the month: Materials quantity variance Labor spending variance Labor efficiency variance $1,200 u 3,400 U $ 900 U Required: Prev 20, 61ll Next > Type here to search A P Home Paon

Explanation / Answer

1a Materials quantity variance SP*(AQ - SQ) 1200 U 5(AQ-3*3500) 1200 U 5AQ - 52500 52500 1200+52500 5AQ 53700/5 AQ AQ 10740 feet Therefore, 64440/10740 6 per foot b Materials Price Variance AQ*(AP-SP) 10740*(6-5) 10740 U The total variance for materials is Materials price Variance 10740 U Materials quantity variance 1200 U Total Variance 11940 U 2 a Compute the standard direct labor rate per hour Labor spending variance = (AR - SR)*Actual hours worked 3400 U 47500 - 5000SR SR = 8.82 b Compute the standard hours allowed for the month's production Labor Efficiency Variance = (Actual hours - Standard hours)*Standard rate 900 U (5000 - Standard hours)*8.82 900 44100 - 8.82 Standard hours 900-44100 8.82 standard hours 43200/8.82 Standard hours 4897.96 c Standard hours allowed per unit of product 4897.96/3500                          1.40

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