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

During May, 1,320 direct labor-hours were worked in Sintering at a total labor cost of $31,680, and 3,000 direct labor-hours were worked in Finishing at a total labor cost of $67,500.

Complete the standard cost card for each product, showing the standard cost of direct materials and direct labor. (Round your answers to 2 decimal places.)

Compute the materials price and quantity variances for each material. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Round your answers to 2 decimal places.)

Compute the labor rate and efficiency variances for each operation. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Round your answers to 2 decimal places.)

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):

Explanation / Answer

1. Complete the standard cost for each product Alpha 6S Zelta 7S Qty Rate Cost Qty Rate Cost Raw Material X442           2.00           2.90             5.80           5.00           2.90           14.50 Y661           3.00           1.90             5.70           4.00           1.90             7.60 Material Cost           11.50           22.10 Labour Cost Sintering           0.20         22.00             4.40           0.40         22.00             8.80 Finishing           0.90         20.50           18.45           1.00         20.50           20.50 Labour Cost           22.85           29.30 Total Standard Cost per Unit           34.35           51.40 Production 2100 1220 Total Standard cost         72,135        62,708 2. Material Price Variance & Quantity Variance X 442 purchase price = $ 48050/15500 = $ 3.1/kg Y661 Purchase price = $ 29700/16500 = $ 1.8/kg Standard Material Requirement X 442 = (2 X 2100)+(5X 1220)= 10300 kg Y661 = (3 X 2100)+(4X 1220)= 11180 kg Actual Consumption = X 442= 10000 kg Y 661= 14500 kg Material Price Variance for Consumption X442 = 10000(3.1-2.9) = $2000 U Y661 = 14500 (1.9-1.8)= $ 1450 F Total = $ 550 U Material Price Variance for Purchase X442 = 15500(3.1-2.9) = $3100 U Y661 = 16500 (1.9-1.8)= $ 1650 F Total = $ 1450 U Material Qty Variance X442 =(10300-10000)X2.9 = $870 F Y661 = (14500-11180)X1.9 = $6308U Total Variance = $ 5438U 3. Labour rate Variance & Efficiency Variance Actual Labour rate Sintering = $31680/1320 = $ 24 per hour Finishing = $67500/3000 = $ 22.5 per hour Labour Rate Variance Sintering = 1320(24-22) = $ 2640U Finishing = 3000(22.5-20.5)= $ 6000 U Total Labour rate variance= $ 8640 U Standard Labour hrs Required Sintering = (2100X 0.2)+(1220X0.9) = 1518 hrs Finishing = (2100X0.4)+ (1220X1) = 2060 hrs Labour efficiency Variance Sintering = (1518-1320)X22 = $ 4356F Finishing = (3000-2060)X 20.5 = $ 19270 U Total Labour efficiency variance = $ 14914 U

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