Part 1 Billy Bats, Inc. manufactures aluminum baseball bats that it sells to uni

Question

Part 1 Billy Bats, Inc. manufactures aluminum baseball bats that it sells to university athletic departments. It has developed the following per unit standard costs for 2018 for each baseball bat: Direct Labor i hour $10.00 $5.00 Direct Materials Standard quantity Standard price Unit standard cost 2 pounds (Aluminum) $8.00 In 2018, the company planned to produce 80,000 baseball bats at a level of 40,000 hours of direct labor. Actual results for 2018 are presented below: 1. Direct materials purchased were 164,000 pounds of aluminum that cost $688,800. 2. Direct materials used were 146,000 pounds of aluminum. 3. Direct labor costs were $374,400 for 39,000 direct labor hours actually worked 4. Actual production was 76,000 baseball bats. Instructions Compute the following variances: 1. Direct materials price 2. Direct materials quantity 3. Direct labor price. 4. Direct labor quantity

Explanation / Answer

1. direct matrials price = cost of aluminium/ pounds purchased

= 688800/164000

= 4.2

Actual standard price assumed = 4

variance = 4.2 - 4 = 0.2 more

2. direct materials quantity = aluminium quantity used / baseball bats produced

= 146000/76000

= 1.921 pounds

assumed quantity = 2 pounds

variance = 2 - 1.921 = 0.079 pounds less

3. direct labor price = total labor cost / hours worked

= 374400/39000

= 9.6

assumed labor cost = 10

variance = 10 - 9.6 = 0.4 less

4. Direct labor quantity = labor hours/actual production

= 39000/76000

= 0.513 hours

actual assumed = 0.5 hours

variance = 0.513 - 0.5 = 0.013 hours more

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