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

Answer a)

Answer b)

Material Quantity Variance = Standard Price of Material per unit* ( Standard Quantity allowed - Actual Quantity Utilised)

= 12.75 (7920-8158)

= -3034.50 i.e. 3034.50 Unfavourable

Material Spending Variance = Actual Quantity * ( Standard Rate - Actual Rate)

= 8158 ( 12.75-13)

= -2039.50 i.e. 2039.50 Unfavourable

Total Direct Materials Cost Variance = Material Quantity Variance + Material Spending Variance

= (-3034.50) + (-2039.50)

= - 5074 i.e. 5074 Unfavourable

Answer C)

Labour Rate Variance = Actual Labour Hours (Standard Rate - Actual Rate)

= 1050 (12-12.36)

= -378 i.e. 378 Unfavourable

Labour Time Variance = Standard Rate (Standard Hours allowed - Actual Hours Used)

= 12 ( 2200-1050)

= 13800 Favourable

Total Direct Labor Cost Variance = Labour Rate Variance + Labour Time Variance

= -378+13800

=13,422 Favourable

Direct materials standard cost per unit 15.3 [1.2 lbs/unit * $ 12.75/lbs] Direct labor standard cost per unit 4 [$12/hour * 20/60] Total Standard Cost per unit 19.3

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