Check Sharp Company manufactures a product for which the following standards hav
ID: 2543338 • Letter: C
Question
Check Sharp Company manufactures a product for which the following standards have been set: standar Direct materials Direct labor 3 feet 2 hours $5 per foot ? per hour 15 During March, the company purchased direct materials at a cost of $44,100, 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 $40,800. The following variances have been computed for the month: Materials quantity variance Labor spending variance Labor efficiency variance $1,500 U $ 3,200 U $ 800 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 Standard Material for actual production 2350*3 7,050 Feet Direct material quantity variance= ( Actual material - Standard material for acual production) *Standard rate Actual material = (1500/5) + 7050 7350 Feet Actual cost per foot = 44100/7350 6 Per feet b Actual rate 6 Per feet Direct material price variance = (Actual rate - Standard rate) * Actual quantity Direct material price variance = (6-5) * 7350 Direct material price variance = 7350 Unfavorable Material quantity variance 1500 Unfavorable Material price variance 7350 Unfavorable Material spending variance 8850 Unfavorable 2 a Labor spending variance 3200 Unfavorable Actual cost 40800 Standard cost 37600 Actual rate 8.5 (40800/4800) Labor rate variance = (Standard rate- Actual rate) * actual Hours 2400 = ( 8.5 - standard rate) * 4800 Standard rate 8 Per hour b Standard labor hours for actual production 4800*8 38,400 Labor Effeciency variance= (Actual hours - Standard hours for acual production) *Standard rate Standard labor hours for actual production = 4800 - 100 = 4700 hours c Standard hours allowed per unit Standard labor hours for actual production 4700 umber of units 2350 Standard hours allowed per unit 2 Hours per unit