Part of your company’s accounting database was destroyed when Godzilla attacked
ID: 2579417 • Letter: P
Question
Part of your company’s accounting database was destroyed when Godzilla attacked the city. You have been able to gather the following data from your files. Reconstruct the remaining information using the available data. All of the raw material purchased during the period was used in production. (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e., zero variance). Round "per unit" answer values to 2 decimal places.)
Direct Labor Direct Material Standard price or rate per unit of input __?__ per hour $14.00 per pound Standard quantity per unit of output __?__ hours per unit __?__ pounds per unit Actual Quantity used per unit of output 2.50 hours __?__ pounds per unit Actual price or rate per unit of input $18.00 per hour $13.00 per pound Actual output 8,500 units 8,500 units Direct-material price variance $61,200 Favorable Direct-material quantity variance __?__ Unfavorable Total direct-material variance $44,400 Favorable Direct-labor rate variance __?__ Unfavorable Direct-labor efficiency variance $72,250 Favorable Total direct-labor variance $51,000 FavorableExplanation / Answer
Direct materials price variance (actual rate - standard rate )*actual qty purchased (13 - 14)*x = 61,200 Actual qty purchased and used 61,200 Actual quantity used per unit of output 61200/8,500 7.2 pounds per unit Direct materials Quantity variance (actual qty - standard qty )*standard rate (61,200 - 8500*x)*14 = 16800 (856,800 - 119000x)= 16800 x = (856,800-16800)/119000 x = 7.058824 or 7.05 Standard qty used per unit of output = $7.05 direct materials qty variance = 16,800 U 2) direct labor rate variance 21250 U Direct labor rate variance (Actual rate - standard rate)*Actual hours (18 - x)*21,250 = 21,250 U Standard price or rate per unit of output = 17 direct labor efficiency variaance (actual hours - standard hours)*Standard rate (21,250 - SH)*17 = 72,250 standard hours = (72250+21250)/17 5500 Standard hours per unit of output = 5500/8500 0.647059 or .65 standard hours per unit of output