1. Arrow Industries employs a standard cost system in which direct materials inv

Question

1. Arrow Industries employs a standard cost system in which direct materials inventory is carried at standard cost. Arrow has established the following standards for the prime costs of one unit of product.

     

    

During November, Arrow purchased 401,000 pounds of direct materials at a total cost of $806,500. The total factory wages for November were $100,500, 90% of which were for direct labor. Arrow manufactured 26,000 units of product during November using 384,500 pounds of direct materials and 6,650 direct labor hours.

  

What is the direct labor efficiency variance for November?

2.The budget for the month of May was for 8,100 units at a direct materials cost of $6 per unit. Direct labor was budgeted at 18 minutes per unit for a total of $202,500. Actual output for the month was 7,600 units with $118,500 in direct materials and $193,275 in direct labor expense. The direct labor standard of 18 minutes was obtained throughout the month. Variance analysis of the performance for the month of May would show a(n):

Standard Quantity Standard
price Standard cost   Direct Materials 15 pounds $ 2.00 per pound $ 30.00   Direct Labor 0.25 hour $ 15.00 per hour $ 3.75 $   33.75  

Explanation / Answer

1

2

Labour Efficency variance Standared Hour* Standard rate Actual Hour * Standard rate Variance 7600*.25*15 6650*.25*15 28500 26600 1900 Favorable

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