Topaz Company makes one product and has set the following standards for material
ID: 2366874 • Letter: T
Question
Topaz Company makes one product and has set the following standards for materials and labor: Direct Materials Direct Labor Standard quantity or hours per unit ? pounds 2.20 hours Standard price or rate ? per pound $ 8.50 per hour Standard cost per unit ? $ 18.70 -------------------------------------------------------------------------------- During the past month, the company purchased 6,100 pounds of direct materials at a cost of $16,470. All of this material was used in the production of 1,200 units of product. Direct labor cost totaled $19,260 for the month. The following variances have been computed: Materials quantity variance $ 1,180 U Total materials spending variance $ 345 F Labor efficiency variance $ 4,250 FExplanation / Answer
Please see the similar Question and solution below:
Question:
Topaz Company makes one product and has set the following standards for materials and labor:
Direct Labor
Standard hours per unit $2.10 hours
Standard rate $8.50 per hour
Standard cost per unit $17.85
During the past month, the company purchased 6,700 pounds of direct materials at a cost of $18,090. All of this material was used in the production of 1,100 units of product. Direct labor cost totaled $16,290 for the month. The following variances have been computed:
Materials quantity variance $ 1,180 U
Total materials spending variance $ 495 F
Labor efficiency variance $ 4,250 F
Solution:
Standard cost per pound is 2.7739.
Actual cost of 18,090 / 6,700# = 2.
70.
Spending Variance 495 F means standard cost of 6,700 # was 18,090 + 495, or 18,585, or 2.7739
Quantity variance was 1,180 U, or 425.4 #
Standard quantity must have been 6,274.6 at stnd cost of 17,405 vs actual 6,700 # at standard of 18,585, an unfavorable 1,180
Standard quantity per unit was 6,274.6# / 1,100 = 5.7 # x 2.7739 = $15.81 DM per unit
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