Exercise 239 Variances Costs Total Standard Cost Price Quant

Exercise 23-9

Variances

Costs

Total Standard Cost

Price

Quantity

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Exercise 23-9 You have been given the following information about the production of Usher Co., and are asked to provide the plant manager with information for a meeting with the vice president of operations. Standard Cost Card Direct materials (6 pounds at $5 per pound) $30.00 Direct labor (0.70 hours at $10) 7.00 Variable overhead (0.70 hours at $4 per hour) 2.80 Fixed overhead (0.70 hours at $9 per hour) 6.30 $46.10 The following is a variance report for the most recent period of operations. Variances Costs Total Standard Cost Price Quantity Direct materials $406,000 $5,670 F $9,100 U Direct labor 94,731 5,600 U 7,500 U

Solution

1) Units produced during the period = Total direct materials standard cost/Standard direct material cost per unit = 406000/30 = 13533 Units 2) Pounds of raw materials purchased and used = (Total standard cost+Unfavorble Quantity variance)/Standard direct material price per unit = (406000+9100)/5 = 83020 Pounds 3) Actual cost per pound of raw material = (Total standard direct material cost-Favorable direct material price variance)/Quantity of raw materials purchased and used = (406000-5670)/83020 = $          4.82 4) Actual direct labor hours worked = (Total standard direct labor cost+Unfavorable direct labor quantity variance)/Standard direct labor rate = (94731+7500)/10 = 10223 Hours 5) Actual rate per direct labor hour = (Total standard direct labor cost+Unfavorable Direct labor price variance)/Actual direct labor hours worked = (94731+5600)/10223 = $          9.81