fancy fixture company manufactures faucets in a small manufa

fancy fixture company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 100 employees. Each employee presently provides 40 hours of labor per week. Information about a production week is as follows:

Standard wage per hour. $21.00

Standard labor time per faucet 20 min.

Standard number of lbs. of brass 5 lbs.

Standard price per lb. of brass $2.80

Actual price per lb. of brass $2.72

Actual lbs. of brass used during the week 59,875 lbs.

Number of faucets produced during the week 11,820

Actual wage per hour $21.40

Actual hours for the week 4,000 hours

Instructions:

Determine (a) the standard cost per unit for direct materials and direct labor; (b) the direct materials price variance, direct materials quantity variance, and total direct materials cost variance; and (c) the direct labor rate variance, direct labor time variance, and total direct labor cost variance.

Solution

1

Calculation of standard cost per unit for direct materials:

Standard number of lbs. of brass per unit

5 Lbs.

Standard price per lb. of brass

$2.80

Standard cost per unit for direct materials = 5 Lbs. * $2.80 =

$    14.00

2

Calculation of standard cost per unit for direct Labor:

Standard labor time per faucet (Hours) = 20 minutes / 60 minutes =

0.3333

Hours

Standard wage per hour.

$21

Standard cost per unit for direct Labor = 0.3333 hours * $21

$      7.00

3

Calculation of direct materials price variance:

Formula :

Direct materials price variance = (Actual Price - Standard Price)* Actual Quantity

Actual Price

$2.72

Standard Price

$2.80

Actual Quantity

59875 Lbs.

Direct materials price variance = (2.72-2.80)*59875 =

$    4,790

Favorable

4

Calculation of direct materials quantity variance:

Formula:

Direct materials quantity variance = (Actual Quantity - Standard Quantity)* Standard Price

Actual Quantity

59875 Lbs.

Standard Quantity = Number of faucets produced * Standard number of lbs. of brass = 11820*5 =

59100 Lbs.

Standard Price

$2.80

Direct materials quantity variance = (59875-59100)*2.80

$    2,170

Unfavorable

5

Calculation of total direct materials cost variance:

Direct materials price variance =

$    4,790

Favorable

Direct materials quantity variance =

$    2,170

Unfavorable

Total direct materials cost variance = (4790-2170)

$    2,620

Favorable

1	Calculation of standard cost per unit for direct materials:
	Standard number of lbs. of brass per unit	5 Lbs.
	Standard price per lb. of brass	$2.80
	Standard cost per unit for direct materials = 5 Lbs. * $2.80 =	$    14.00
2	Calculation of standard cost per unit for direct Labor:
	Standard labor time per faucet (Hours) = 20 minutes / 60 minutes =	0.3333	Hours
	Standard wage per hour.	$21
	Standard cost per unit for direct Labor = 0.3333 hours * $21	$      7.00
3	Calculation of direct materials price variance:
	Formula :
	Direct materials price variance = (Actual Price - Standard Price)* Actual Quantity
	Actual Price	$2.72
	Standard Price	$2.80
	Actual Quantity	59875 Lbs.
	Direct materials price variance = (2.72-2.80)*59875 =	$    4,790	Favorable
4	Calculation of direct materials quantity variance:
	Formula:
	Direct materials quantity variance = (Actual Quantity - Standard Quantity)* Standard Price
	Actual Quantity	59875 Lbs.
	Standard Quantity = Number of faucets produced * Standard number of lbs. of brass = 11820*5 =	59100 Lbs.
	Standard Price	$2.80
	Direct materials quantity variance = (59875-59100)*2.80	$    2,170	Unfavorable
5	Calculation of total direct materials cost variance:
	Direct materials price variance =	$    4,790	Favorable
	Direct materials quantity variance =	$    2,170	Unfavorable
	Total direct materials cost variance = (4790-2170)	$    2,620	Favorable