Check my work 2 Sharp Company manufactures a product for which the following sta
ID: 2408440 • Letter: C
Question
Check my work 2 Sharp Company manufactures a product for which the following standards have been set Quantity Standard Price Cost feet hours $5 per foot 15 points Direet labor 2per hour During March, the company purchased direct materials at a cost of $45,375, all of which were used in the production of 2,350 units of product. In addition, 4,800 direct labor-hours were worked on the product during the month. The cost of this labor time was $50,400 The following variances have been computed for the month: eBook Matersals quantity variance Labor spending variance Labor effieLency variance 2,250 3,400 1,000 U Required: 1. For direct materials: a. Compute the actual cost per foot of materials for March. b. Compute the price variance and the spending variance. 2. For direct labor: a. Compute the standard direct labor rate per hour b. Compute the standard hours allowed for the month's production. c. Compute the standard hours allowed per unit of productExplanation / Answer
1(a) MQV = Standard Price ( Standard Quantity- Actual Quantity) -$2,250 = $5((3X2350)-AQ) -$2,250 = $5(7050-AQ) -$450 = 7050-AQ AQ = 7500 Actual Cost per Foot = Actual Price /Actual Quantity = $45375/7500 = $6.05 1((b) MPV = (Standard Price- Actual price)*Actual Quantity = ($5-$6.05)*7500 = 7875 Unfavourable Mat. Spending Var. = MQV+MPV = -2250+7875 = $5625 Fav 2(a) Labour Sepnding Var. = LRV+ LEV ($3,400) = LRV+($1000) LRV = ($2,400) LRV = (Stand Rate-Actual Rate)* Actual Hour ($2,400) = (SR X 4800 Hour)- $50400 $48,000 = SRX 4800 SR or Standard Rate/Hour = $10/Hour 2(b)LEV = (Stand. Hour- Actual Hour)* SR -$1000 = (SH-4800)$10 (-$1000+$48000) = 10SH SH = 4700 Hour