Company manufactures a product for which the following standards have been set Direct materials Direct Labor Standard Quantity or Hours 3 feet 2 hours Standard Price or Rate $5 per foot 2

1.

a)Material quantity variance = ( Standard quantity - Actual quantity ) x Standard rate or ((2,875*3) - AQ) x 5 =(4,050)

Therefore Actual quantity = 9,435 feet

Total cost of direct materials = $ 56,610

Therefore Actual cost per foot = 56,610 / 9,435 = $ 6.00

b) Direct material price variance = ( Standard Price - Actual price) x Actual quantity = (5-6.00) x 9,435 = $ 9,435 U

Direct material spending variance = ( 2,875 x 15 - 56,610 ) = $ 13,485 U

2. Labor spending variance = 2,180 U

Labor efficiency variance = 770 U

Labor rate variance = 2,180 U - 770 U = 1,410 U

Labor rate variance = ( Standard labor hour rate - Actual labor hour rate) x Actual hours worked or

(X - 8) x 4,700 = (4,700)

Standard labor hour rate is $ 7

b) Standard hours allowed for the months production :

Labor efficiency variance = ( Std. hrs. allowed for actual prod. - Actual hours worked) x Std. hourly rate

or ( X - 4,700) x 7= (770)

Standard hours allowed for actual production is $ 4,590

c) Standard hours allowed per unit of product = 4,590 / 2,875 = 1.6 hours

Standard direct labor rate per hour = 32,130 /4,700 = $ 6.84