New Jersey Valve Company manufactured 7,600 units during January of a control va

Question

New Jersey Valve Company manufactured 7,600 units during January of a control valve used by milk processors in its Camden plant. Records indicated the following: Direct labor Direct material purchased Direct material used 46,800 hr. at $15.20 per hr. 29,000 lb. at $2.40 per 1b. 28,300 lb The control valve has the following standard prime costs Direct material4lb. at $2.30 per lb Direct labor $9.20 93.60 $102.80 6 hr. at $15.60 per hr Standard prime cost per unit Required: 1. Prepare a schedule of standard production costs for January, based on actual production of 7,600 units. 2. For the month of January, compute the following variances

Explanation / Answer

1 Standard costs Direct materials 69920 =7600*9.2 Direct labor 711360 =7600*93.6 Total standard production costs 781280 2 Direct materials price variance=28300*(2.4-2.3)= $2830 Unfavorable Direct materials quantity variance=2.3*(28300-7600*4)=$4830 Favorable Direct materials purchase price variance=29000*(2.4-2.3)= $2900 Unfavorable Direct labor rate variance=46800*(15.2-15.6)= $18720 Favorable Direct labor efficiency variance=15.6*(46800-7600*6)= $18720 Unfavorable

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