cornerstones 3rd eddition by Hansen, Don R problem #2 Sparingly Manufacturing ha
ID: 2462129 • Letter: C
Question
cornerstones 3rd eddition by Hansen, Don R
problem #2
Sparingly Manufacturing has developled the following standards for one of its products.
STANDARD VARIABLE COST CARD (One Unit of Product)
Material: 5yards x $6 per yard $30.00
Direct labor: 2hours x $8 per hour 16.00
Variable manufacturing overhead: 2 hours x $5 per hour 10.00
Total standard variable cost per unit 56.00
The company records materials price variances at the time of purchase.
The following activity occurred during the month of December:
Materials purchased: 5,200 yards costing $29,900
Materials used: 4,750 yards
Units produced: 1,000 units
Direct labor: 2,100 hours costing $17,850
Required:
a. calculate the direct materials price variance.
b. calculate the direct materials usage variance.
c. calculate the direct labor rate variance.
d. calculate the direct labor efficiency variance.
thank you in advance for your help.
Explanation / Answer
Material price variance = (Actual price - Standard price) x Actual quantity
=(5.75-6)*4750
=1187.5 (F)
Material usage variance = (Actual unit usage - Standard unit usage) x Standard cost per unit
=(4750-5000)*6
=1500 (F)
Labour rate variance = (Actual rate - Standard rate) x Actual hours worked
=(8.5-8)*2100
=1050 (A)
Labour efficiency variance = (Actual hours - Standard hours) x standard rate per hour
=(2100-2000)*8
=800 (A)
Standard (1 units)
Standard (1000 units)
Actual (1000 units)
Units
Rate
Total
Units
Rate
Total
Units
Rate
Total
Material
5
6
30
5000
6
30000
4750
5.75
27312.5
Direct labour
2
8
16
2000
8
16000
2100
8.5
17850
Standard (1 units)
Standard (1000 units)
Actual (1000 units)
Units
Rate
Total
Units
Rate
Total
Units
Rate
Total
Material
5
6
30
5000
6
30000
4750
5.75
27312.5
Direct labour
2
8
16
2000
8
16000
2100
8.5
17850
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