10â1
What is a quantity standard? What is a price standard?
10â2
Why are separate price and quantity variances computed?
10â3
Who is generally responsible for the materials price variance? The materials quantity variance? The labor efficiency variance?
10â4
The materials price variance can be computed at what two different points in time? Which point is better? Why?
10â5
If the materials price variance is favorable but the materials quantity variance is unfavorable, what might this indicate?
10â6
Should standards be used to identify who to blame for problems?
10â7
âOur workers are all under labor contracts; therefore, our labor rate variance is bound to be zero.â Discuss.
10â8
What effect, if any, would you expect poor-quality materials to have on direct labor variances?
10â1
What is a quantity standard? What is a price standard?
10â2
Why are separate price and quantity variances computed?
10â3
Who is generally responsible for the materials price variance? The materials quantity variance? The labor efficiency variance?
10â4
The materials price variance can be computed at what two different points in time? Which point is better? Why?
10â5
If the materials price variance is favorable but the materials quantity variance is unfavorable, what might this indicate?
10â6
Should standards be used to identify who to blame for problems?
10â7
âOur workers are all under labor contracts; therefore, our labor rate variance is bound to be zero.â Discuss.
10â8
What effect, if any, would you expect poor-quality materials to have on direct labor variances?
Related questions
Topaz Company makes one product andhas set the following standards for materials and labor:
| DirectMaterials | Direct Labor | |||
| Standard quantity or hours per unit | ?pounds | 2.50 | hours | |
| Standard price or rate | ? perpound | $ | 8.50 | per hour |
| Standard cost per unit | ? | $ | 21.25 | |
During the past month, the companypurchased 6,700 pounds of direct materials at a cost of $17,085.All of this material was used in the production of 1,300 units ofproduct. Direct labor cost totaled $24,750 for the month. Thefollowing variances have been computed: |
| Materials quantity variance | $ | 1,120 | U |
| Total materials spending variance | $ | 555 | F |
| Labor efficiency variance | $ | 4,250 | F |
| Required: |
| 1. | Fordirect materials: |
| a. | Compute the standard price per poundfor materials. (Donot round intermediate calculations. Round your answer to 2 decimalplaces.) |
| Standard price | $ |
| b. | Compute the standard quantityallowed for materials for the month%u2019s production. (Round your intermediatecalculation to 2 decimal places.) |
| Standard quantity | pounds |
| c. | Compute the standard quantity ofmaterials allowed per unit of product. (Round your answer to 2 decimalplaces.) |
| Standard quantity | pounds per unit |
| 2. | Fordirect labor: |
| a. | Compute the actual direct labor cost per hour for the month.(Round your answerto 2 decimal places.) |
| Actual direct labor cost per hour |
| b. | Compute the labor rate variance.(Do not roundintermediate calculations. Round your answer to the nearest dollar.Indicate the effect of variance by selecting "F" for favorable, "U"for unfavorable, and "None" for no effect (i.e., zero variance).Input all amounts as positive values. Leave no cells blank - becertain to enter "0" wherever required.) |
| Labor rate variance | $ |
Topaz Company makes one product andhas set the following standards for materials and labor:
| DirectMaterials | Direct Labor | |||
| Standard quantity or hours per unit | ?pounds | 2.50 | hours | |
| Standard price or rate | ? perpound | $ | 8.50 | per hour |
| Standard cost per unit | ? | $ | 21.25 | |
During the past month, the companypurchased 6,700 pounds of direct materials at a cost of $17,085.All of this material was used in the production of 1,300 units ofproduct. Direct labor cost totaled $24,750 for the month. Thefollowing variances have been computed: |
| Materials quantity variance | $ | 1,120 | U |
| Total materials spending variance | $ | 555 | F |
| Labor efficiency variance | $ | 4,250 | F |
| Required: |
| 1. | Fordirect materials: |
| a. | Compute the standard price per poundfor materials. (Donot round intermediate calculations. Round your answer to 2 decimalplaces.) |
| Standard price | $ |
| b. | Compute the standard quantityallowed for materials for the month%u2019s production. (Round your intermediatecalculation to 2 decimal places.) |
| Standard quantity | pounds |
| c. | Compute the standard quantity ofmaterials allowed per unit of product. (Round your answer to 2 decimalplaces.) |
| Standard quantity | pounds per unit |
| 2. | Fordirect labor: |
| a. | Compute the actual direct labor cost per hour for the month.(Round your answerto 2 decimal places.) |
| Actual direct labor cost per hour |
| b. | Compute the labor rate variance.(Do not roundintermediate calculations. Round your answer to the nearest dollar.Indicate the effect of variance by selecting "F" for favorable, "U"for unfavorable, and "None" for no effect (i.e., zero variance).Input all amounts as positive values. Leave no cells blank - becertain to enter "0" wherever required.) |
| Labor rate variance | $ |
Mickley Corporation produces two products, Alpha6s and Zeta7s,which pass through two operations, Sintering and Finishing. Each ofthe products uses two raw materialsâX442 and Y661. The company usesa standard cost system, with the following standards for eachproduct (on a per unit basis):
| Raw Material | Standard Labor Time | ||||
| Product | X442 | Y661 | Sintering | Finishing | |
| Alpha6 | 1.5 kilos | 2.5liters | 0.20 hours | 0.90 hours | |
| Zeta7 | 3.5 kilos | 3.5 liters | 0.35 hours | 0.80 hours | |
Information relating to materials purchased and materials usedin production during May follows:
| Material | Purchases | PurchaseCost | Standard Price | Used in Production | |||
| X442 | 14,700 | kilos | $64,680 | $4.20 | per kilo | 9,200 | kilos |
| Y661 | 15,700 | liters | $23,550 | $1.60 | per liter | 13,700 | liters |
The following additional information is available:
The company recognizes price variances when materials arepurchased.
The standard labor rate is $22.00 per hour in Sintering and$20.50 per hour in Finishing.
During May, 1,200 direct labor-hours were worked in Sintering ata total labor cost of $27,840, and 2,920 direct labor-hours wereworked in Finishing at a total labor cost of $65,700.
Production during May was 2,200 Alpha6s and 1,700 Zeta7s.
Required:
2. Compute the materials price and quantity variances for eachmaterial.
3. Compute the labor rate and efficiency variances for eachoperation.
Req 1
Req 2
Req 3
Compute the materials price and quantity variances for eachmaterial. (Indicate the effect of each variance by selecting "F"for favorable, "U" for unfavorable, and "None" for no effect (i.e.,zero variance). Input all amounts as positive values.)
Req 1 Req 2 Req 3 Compute the labor rate and efficiency variances for eachoperation. (Indicate the effect of each variance by selecting "F"for favorable, "U" for unfavorable, and "None" for no effect (i.e.,zero variance). Input all amounts as positive values.)
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