You have been given the following information about the production of Usher Co.,
ID: 2471242 • Letter: Y
Question
You have been given the following information about the production of Usher Co., and are asked to provide the plant manager with information for a meeting with the vice president of operations.
The following is a variance report for the most recent period of operations.
Variances
Costs
Total Standard Cost
Price
Quantity
How many units were produced during the period? Number of units 11629
How many pounds of raw material were purchased and used during the period? (Round answer to 0 decimal places, e.g. 125.)
Standard Cost Card Direct materials (7 pounds at $5 per pound) $35.00 Direct labor (0.70 hours at $7) 4.90 Variable overhead (0.70 hours at $4 per hour) 2.80 Fixed overhead (0.70 hours at $8 per hour) 5.60 $48.30Explanation / Answer
a.
Standard cost per unit = $35 per unit
Total standard cost = Standard cost per unit * Units produced = $35 * Unit produced = $407,000
Units produced = $407,000/$35 = 11,628.57 i.e. 11,629 units
b.
Material quantity variance = (Actual quantity – Standard quantity) * Standard price
Standard quantity = 11,629 units * 7 pounds = 81,403 pounds
Standard price = $5
$9,000 = (Actual quantity – 81,403 pounds) * $5
Actual quantity – 81,403 pounds = $1,800
Actual quantity = 81,403 + 1,800 = 83,203 pounds
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