Chapter 13B – Standard Costs
Exercises
Exercise 18
Direct labor ...................................................... $21.00 × 2 hrs.
Direct materials ............................................... $9.25 × 20 bd. ft.
Variable factory overhead .............................. $3.80 × 2 hrs.
Fixed factory overhead ................................... $4.25 × 2 hrs.
Total cost per unit ......................................
$ 42.00
185.00
7.60
8.50
$ 243.10
Exercise 21
Standard direct materials for units produced (5,900 units × 2 lbs.) .......
11,800 lbs.
Using the equation for direct materials quantity variance, solve for the standard
direct materials price per pound.
Direct Materials Quantity Variance = (Actual Quantity – Standard Quantity) × Standard Price
$410 = (12,000 lbs. – 11,800 lbs.) × Standard Price
$410 = 200 lbs. × Standard Price
Standard Price = $2.05 per pound
Standard Price per Unit of Product = $2.05 × 2 lbs. per unit = $4.10
Alternate Solution One:
Materials used .................................................................
Favorable price variance ................................................
Favorable price variance per lb. ($3,000 ÷ 12,000 lbs.)
Unit price of direct materials..........................................
Plus price variance (favorable) per lb. .........................
Standard price per lb. ....................................................
Pounds per unit of product ............................................
Standard direct materials cost per unit of product ......
12,000 lbs.
$3,000
$0.25
$2.30
0.25
$2.05
× 2
$4.10
Alternate Solution Two:
Product finished ...................................................................
Standard finished product for direct materials used
(12,000 lbs. ÷ 2 lbs.) ........................................................
Deficiency of finished product for materials used .......
Standard cost for direct materials:
Quantity variance divided by deficiency of product
for materials used ($410 ÷ 100 units) .......................
5,900 units
6,000
(100) units
$4.10
Exercise 22
a.
Standard
Quantity
Whole tomatoes...............
Vinegar .............................
Corn syrup .......................
Salt....................................
7,500
600
50
500
×
Standard
Price
=
Standard Cost
per Batch
$0.40
1.75
8.00
0.70
Pounds per batch
$3,000
1,050
400
350
$4,800
÷6,000 lbs.
$ 0.80 per lb.
b.
Actual
Standard
Quantity Quantity
for Batch
per
H3001
Batch
Materials
Quantity
Standard
Quantity
Difference ×
Price
= Variance
Tomatoes ......... 7,850
7,500
350
$0.40
Vinegar .............
575
600
–25
1.75
Corn syrup .......
63
50
13
8.00
Salt....................
480
500
–20
0.70
Direct materials quantity variance ....................................................
$ 140.00
– 43.75
104.00
– 14.00
$186.25
U
F
U
F
Chapter 13B – Standard Costs
Problems
Problem 4
a.
Standard
Materials and
Labor Cost
per Faucet
Direct materials ($1.25 × 0.80 lb.) ............................................
Direct labor [$18.00 × (12 min. ÷ 60 min.)] ..............................
$1.00
3.60
$4.60
b. Direct Materials Cost Variance
Price variance:
Direct Materials Price Variance = (Actual Price – Standard Price) × Actual Quantity
= ($1.40 per lb. – $1.25 per lb.) × 10,200 lbs.
= $1,530 Unfavorable Variance
Quantity variance:
Direct Materials Quantity Variance = (Actual Quantity – Standard Quantity) ×
Standard Price
= (10,200 lbs. – 9,600 lbs.*) × $1.25 per lb.
= $750 Unfavorable Variance
*12,000 units × 0.80 lb.
Total direct materials cost variance:
Direct Materials Cost Variance = Direct Materials Price Variance + Direct
Materials Quantity Variance
= $1,530 + $750
= $2,280 Unfavorable Variance
Also computed as:
Actual total direct materials cost (10,200 lbs. × $1.40) ..................
Less standard total direct materials cost (9,600 lbs. × $1.25) .......
$
14,280
12,000
Total direct materials unfavorable cost variance ........................
$
2,280
Problem 4, Concluded
c.
Direct Labor Cost Variance
Rate variance:
Direct Labor Rate Variance = (Actual Rate per Hour – Standard Rate per Hour) ×
Actual Hours
= ($18.75 – $18.00) × 2,160 hrs.*
= $1,620 Unfavorable Variance
*60 employees × 36 hrs. = 2,160 hrs.
Time variance:
Direct Labor Time Variance = (Actual Direct Labor Hours – Standard Direct Labor
Hours) × Standard Rate per Hour
= (2,160 hrs.* – 2,400 hrs.**) × $18.00 per hr.
= – $4,320 Favorable Variance
*60 employees × 36 hrs. = 2,160 hrs.
**12,000 units × 0.20 hr. = 2,400 hrs.
Total direct labor cost variance:
Direct Labor Cost Variance = Direct Labor Rate Variance + Direct Labor Time
Variance
= $1,620 – $4,320
= – $2,700 Favorable Variance
Also computed as:
Actual total direct labor cost (2,160 hrs. × $18.75).........................
Less standard total direct labor cost (2,400 hrs. × $18.00) ...........
Total direct labor favorable cost variance ...................................
$
–$
40,500
43,200
2,700