I Just Cleaned Up This Mess is a manufacturer of cleaning products. During the p
ID: 2521960 • Letter: I
Question
I Just Cleaned Up This Mess is a manufacturer of cleaning products. During the period just ended, $62,400 in direct materials were purchased. All of the direct materials purchased were used in production. The direct material price variance for the period was $4,800 unfavorable; the total direct material variance was $14,400 unfavorable. The cost of direct material was expected to be $6 per pound. 3,800 actual direct labor hours were logged during production. The direct labor cost was expected to be $16 per unit of product. Additional information related to direct labor is as follows: $8 per direct labor hour $1,600 favorable standard direct labor rate direct labor efficiency variance total direct labor variance$680 unfavorable Using the above data, calculate the following: The number of units produced during the period were The standard quantity of material allowed to produce one unit of product was pounds per unit. (round to the nearest whole number) The actual direct labor rate was $per hour. (round to the nearest penny)Explanation / Answer
Answer)
Requirement 1)
Direct labour efficiency variance:
(Standard hours(SH)- actual hours(AH))×standard price =$1600
(SH-3800 HOURS)×$8=$1600 favourable
SH=4000 hours
The number of units produced:
Standard hours×std. Direct labour rate per hour/STD. Direct labour rate per product.
4000 hours×$8/$16=2000 units
Requirement 2)
Total direct material variance:$14400 unfavorable
STD. Costs-actual costs=$14400 unfavorable
STD hours×std. Price-$62400=$14400 unfavorable
STD. Hours×$6-$62400=$14400
Standard hours=8000 pounds
Standard quantity of material allowed to produce one unit of product was: 8000pounds/2000 units=4 pounds
Requirement 3)
Total direct labour variance:$680 unfavorable
Standard costs-actual cost=$680 unfavorable
(STD hours×std rate per hour)-(actual hours×actual rate)=$680 unfavorable
(4000 hours×$6)-(3800 hours×actual rate)=$680 unfavorable
$24000+$680/3800 hours=actual rate
Actual rate per hour=$6.50
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