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Homework answers / question archive / Yoksa Mezun muyum Corporation manufactures lamps
Yoksa Mezun muyum Corporation manufactures lamps. It has set up the following standards per finished unit for direct materials and direct manufacturing labor.
Direct Materials : 10 gr. at $4.50 per gr. $ 45.00
Direct Labor : 0.5 hour at $30 per hour $ 15.00
The number of finished units budgeted for January 2019 was 10,000; 9,850 units were actually produced. Actual results in January 2019 were:
Direct Materials : 98,055 gr. used
Direct Labor : 4,900 hours $ 154,350
Assume that there was no beginning inventory of either direct materials or finished units. During the month, materials purchases amounted to 100 kg. at a total cost of $465,000.
| a | Direct Material Price Variance = | (Actual Price - Standard Price) * Actual Quantity | |
| = | ($4.65 - $4.50) * 100,000 gr. | ||
| = | $15,000 | Unfavorable | |
| Direct Material quantity Variance = | (Actual Quantity - Standard Quantity) * Standard Rate | ||
| = | (98,055 - 98,500) * $4.50 | ||
| = | $2,003 | Favorable | |
| Direct labor price variance = | (Actual Rate - Standard Rate) * Actual hours | ||
| = | ($31.50 per hr. - $30.00 per hr.] * 4,900 hours | ||
| = | $7,350 | Unfavorable | |
| Direct labor quantity variance = | (Actual hours - Standard hours) * Standard Rate | ||
| = | (4,900 - 4,925) * $30.00 | ||
| = | $750 | Favorable | |
| 3 | Based on price variance, standard materials used and efficient use of direct labor which led to unfavorable | ||
| price variance and efficiency variances are favorable because of high quality and efficient labor | |||
