Sharp Company manufactures a product for which the following standards have been

Question

Sharp Company manufactures a product for which the following standards have been set Standard Quantity Standard Price Standard or Hours 3 feet ? hours Cost $15 or Rate Direct materials Direct labor $5 per foot ? per hour During March, the company purchased direct materials at a cost of $45,180, all of which were used in the production of 2,290 units of product. In addition, 4,700 hours of direct labor time were worked on the product during the month. The cost of this labor time was $32,900. The following variances have been computed for the month: Materials quantity variance Labor spending variance Labor efficiency variance $3,300 U $3,130 U $ 780 U Required 1. For direct materials a. Compute the actual cost per foot for materials for March. (Round your answer to 2 decimal places.) ctual cost per foot

Explanation / Answer

Req 1: For Direct Material Actual Output :   2290 units Standard Qty required per unit of output = 3 feet Standard Qty Required for actual Output (SQ) =( 2290*3)= 6870 feet Std Price per feet (SP) = $ 5 per foot Actual material cost = $ 45,180 Actual Quantity consumed for actual output = AQ Actual Price per foot = AP Material Quantity Variance = $ 3,300 U Material Quantity Variance = SP (SQ-AQ) $ 3,300 U = 5 (6870 -AQ) AQ = 7530 feet Actual Quantity Consumed for actual Quantity (AQ) = 7,530 feet Actual Price per foot (AP) = (45180/7530) = $ 6 per foot Material Price variance = AQ (SP-AP) ( 7530 (5-6)) = $ 7,530 Unfavorable Material Spending Variance= SQ*SP-AQ*AP (6870 *5 - 7530*6)= $10,830 Unfavorable Actual cost per foot $ 6 per foot Price Variance $7,530 Unfav Spending variance $10,830 Unfav Req 2: For Direct Labour Actual Output = 2290 units Actual hours worked for actual output (AH) = 4,700 hours Actual labour cost = $ 32,900 Actual labour rate per hour (AR) =(32900/4700) = $ 7 per hour Labouir Spending variance = $ 3,130 Unfav Labour Efficiency Variance = $ 780 unfav Labour Spending Variance = Labour rate variance + Labour Efficeincy Variance $3130 unfav = Labour rate variance + $780 unfav Labour Rate variance = $ 2,350 unfav Labour Rate variance = AH (SR-AR) $2350 unfav = 4,700 (SR - $ 7) Standard rate per hour (SR) = $ 6.50 per hour Labour Efficiency Variance = SR (SH-AH) $ 780 Unfav = $ 6.50 ( SH - 4,700 hours) Standard hours for actual month production (SH) = 4,580 hours Standard Hours for actual production = 4,580 hours Actual production = 2290 units Standard hour required per unit of output =(4580/2290) = 2 hours per unit Standard rate per hour $ 6.50 per hour Std hours for actual output 4580 hours Std hour per unit of output 2 hours per unit

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