CHAPTER 10: See information in
CHAPTER 10: See information in Textbook for Exercise 10-50. Ineed to change two numbers. Change the number of units produced tobe 410,000 and the number of pounds of materials purchased to be2,075,000 instead of the quantities given for these in theexercise.
10-50
At the beginning of the year, Crag Company had the followingstandard cost sheet for one of its plastic products.
Direct materials ( 5 lbs @54.00) $20.00
Direct Labor ( 2 hours @15.00) 30.00
Standard prime cost perunit 50.00
the actual results for the year are as follows:
a. Units produced: 400,000
b. Materials purchased: 2,060,000 pounds @ 3.95
c. Materials used: 2,100,000 pounds
d. Direct labor: 825,000 hours @ 14.85
1. Compared price and usage variances for materials.
2. Compute labor rate efficiency variances, using both theformula and columnar approaches.
Answer:
Using Revised Figures
1.Price Variance = (Actual Price – Standard Price) x ActualQuantity= ($3.95 – 4) x 2075000 = $103750 (F)
Usage Variance = (Actual Quantity used – Standard Quantity) xStandard Price= (2100000 – 410000 x 5) x $4 = $200000 (U)
2.Labor Rate Variance = (Actual Rate – Standard Rate) x Actualhours= ($14.85 – 15) x 825000 = $123750 (F)
Labor Efficiency Variance = (Actual hours – Standard Hours) xStandard Rate= (825000 – 410000 x 2) x $15 = $75000 (U)
| Actual Cost | Standard Cost | ||||||||||
| AH | x | AR | AH | x | SR | SH | x | SR | |||
| 825000 | $ 14.85 | 825000 | $ 15.00 | 820000 | $ 15.00 | ||||||
| $12,251,250 | $12,375,000 | $12,300,000 | |||||||||
| DirectLabor rate Variance | $ (123,750) | Favorable | |||||||||
| DirectLabor Efficiency Variance | $ 75,000 | Unfavorable | |||||||||
| TotalLabor Variance | $ (48,750) | Unfavorable | |||||||||
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