Abbeville Fixture Company manufactures units in a small manufacturing facility.

Question

Abbeville Fixture Company manufactures units in a small manufacturing facility. The units are made from brass. Manufacturing has 30 employees. Each employee presently provides 35 hours of labor per week. Information about a production week is as follows:

Required:

a. Determine the standard cost per unit for direct materials and direct labor. Round the cost per unit to two decimal places.

b. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Round your answers to the nearest whole dollar. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

c. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Round your answers to the nearest whole dollar. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Standard wage per hour $12 Standard labor time per unit 20 min. Standard number of lbs. of brass 1.2 lbs. Standard price per lb. of brass $12.75 Actual price per lb. of brass $13 Actual lbs. of brass used during the week 8,158 lbs. Number of units produced during the week 6,600 Actual wage per hour $12.36 Actual hours for the week (30 employees × 35 hours) 1,050 hrs.

Explanation / Answer

a) Calculation of Standard cost per unit (Amounts in $)

b) Direct Materials Price Variance = (Std Price - Actual Price)Actual qty

= ($12.75 - $13)*8,158 lbs. = ($2,040) Unfavorable

Direct Materials Quantity Variance = (Std Qty - Actual Qty)*Std Price

= [(6,600 units*1.2 lbs) - 8,158 lbs]*$12.75

= (7,920 - 8,158)*$12.75 = ($3,034) Unfavorable

c) Direct Labor Rate Variance = (Std Rate - Actual Rate)Actual Hours

= ($12 - $12.36)*1,050 hours = ($378) Unfavorable

Direct Labor Time Variance = (Std Hrs - Actual Hrs)*Std Rate

= {[6,600 units*(20 min/60 min)] - 1,050 hrs}*$12

= (2,200 hrs - 1,050 hrs)*$12 = $13,800 Favorable

Total Direct Labor Cost Variance = $13,800 Favorable - $378 Unfavorable = $13,422 Favorable

  

Direct materials standard cost per unit (1.2 lbs*$12.75) 15.30 Direct labor standard cost per unit [(20 min/60 min)*$12] 4.00 Total standard cost per unit ($15.30+$4.00) 19.30

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