Direct Materials and Direct Labor Variance Analysis Jericho Fixture Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 45 employees. Each employee presently provides 38 hours of labor per week. Information about a production week is as follows: Line Item Description Value Standard number of lbs. of brass 0.4 lb. Standard price per lb. of brass $0.80 Standard wage per hr. $21.00 Standard labor time per faucet 15 min. Actual price per lb. of brass $0.90 Actual lbs. of brass used during the week 4,500 lbs. Number of faucets produced during the week 10,000 Actual wage per hr. $22.00 Actual hrs. for the week (45 employees × 38 hours) 1,710 Required: a. Determine the standard cost per unit for direct materials and direct labor. Round the cost per unit to two decimal places. Line Item Description Cost per Unit Direct materials standard cost per unit $fill in the blank 1 Direct labor standard cost per unit $fill in the blank 2 Total standard cost per unit $fill in the blank 3 b. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Line Item Description Amount Variance Direct Materials Price Variance $fill in the blank 4 Direct Materials Quantity Variance $fill in the blank 6 Total Direct Materials Cost Variance $fill in the blank 8 c. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Line Item Description Amount Variance Direct Labor Rate Variance $fill in the blank 10 Direct Labor Time Variance $fill in the blank 12 Total Direct Labor Cost Variance $fill in the blank 14

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter9: Evaluating Variances From Standard Costs

Section: Chapter Questions

Problem 1PA: Shasta Fixture Company manufactures faucets in a small manufacturing facility. The faucets are made...

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Direct Materials and Direct Labor Variance Analysis

Jericho Fixture Company manufactures faucets in a small manufacturing facility. The faucets are made from brass. Manufacturing has 45 employees. Each employee presently provides 38 hours of labor per week. Information about a production week is as follows:

Line Item Description	Value
Standard number of lbs. of brass	0.4 lb.
Standard price per lb. of brass	$0.80
Standard wage per hr.	$21.00
Standard labor time per faucet	15 min.
Actual price per lb. of brass	$0.90
Actual lbs. of brass used during the week	4,500 lbs.
Number of faucets produced during the week	10,000
Actual wage per hr.	$22.00
Actual hrs. for the week (45 employees × 38 hours)	1,710

Required:

a. Determine the standard cost per unit for direct materials and direct labor. Round the cost per unit to two decimal places.

Line Item Description	Cost per Unit
Direct materials standard cost per unit	$fill in the blank 1
Direct labor standard cost per unit	$fill in the blank 2
Total standard cost per unit	$fill in the blank 3

b. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Line Item Description	Amount	Variance
Direct Materials Price Variance	$fill in the blank 4
Direct Materials Quantity Variance	$fill in the blank 6
Total Direct Materials Cost Variance	$fill in the blank 8

c. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Line Item Description	Amount	Variance
Direct Labor Rate Variance	$fill in the blank 10
Direct Labor Time Variance	$fill in the blank 12
Total Direct Labor Cost Variance	$fill in the blank 14

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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