Bob\'s Company manufactures a product for which the following standards have bee
ID: 2558837 • Letter: B
Question
Bob's Company manufactures a product for which the following standards have been set:
During March, the company purchased direct materials at a cost of $44,160, 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 $36,000. The following variances have been computed for the month:
U
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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 product.
Standard Quantityor Hours Standard Price
or Rate Standard
Cost Direct materials 3 feet $ 5 per foot $ 15 Direct labor ? hours ? per hour ?
Explanation / Answer
1) total material variance material quantity variance (AQ used - standard qty allowed)*standard rate (x - 3*2350)5 = 3,150 5x - 35,250 =3150 x = (3150+35250)/5 7680 a) actual cost per foot of materials = 44160/7680 5.75 answer b) material price variance (Actual rate - standard rate )*Actual qty (5.75-5)*7680 5760 U answer Spending variance 3150U+5760U 8910 U answer 2) labor spending variance 3,100 U labor efficiency variance 700 U labor price variance 2400 U a) labor rate variance (Actual rate - standard rate )*actual hrs (36,000 - x*4800)=2400 x = (36000-2400)/4800 7 answer b) Standard hrs allowed (Actual hr- standard hrs allowed)*standard rate (4800 - x)*7 = 700 33,600 - 7x = 700 x = (33600-700)/7 4700 answer c) standard hrs allowed per unit 4700/2350 2 per hr answer