Crede Manu. Co uses standard cost accounting system. In 2005, 33,000 units were produced. Each unit took
several pounds of direct materials and 11/3 standard hours of direct labor at a standard hourly rate of $12. Normal
capacity was 42,000 direct labor hours. During the year, 132,600 pounds of raw materials were purchased at $.90/
pound. all pounds were used during the year.
a. materials price variance was $3960 unfavorable, find the standard materials price/ pound?
Actual material used
132600 x.9 =119340
Less: unfavorable price variance = 3960
Total Standard material price
115380
Standard price per unit = 115380/132600 = .8701 per unit
b. materials quantity variance was $2871 favorable, find the standard materials quantity/ unit?
Actual material used at standard price = 132600 x .8701
= 115375
Add: favorable material qty. variance.
= 2871
Total standard for material usage.
118246
Standard per unit = 118246/.8701 = 135900 quantity allowed/33000=4.118 pound per unit
c. Find the standard hours allowed for the units produced?
=
11/3 = 3.6667 hours per unit
(please check your data is it 11/3 or not) if it is 3/11 then
.272 per hour
dilator quantity variances was $8400 unfavorable, find actual direct labor hours worked?
Standard direct hours allowed for actual production x standard rate
If 11/3 then:
33000 x3.6667 x 12
=1452000
Add: unf. Variance
Actual labor cost
8400
=
1460400
Total actual hours worked = 1460400/12 = 121700 hours
And if 3/11 then:
33000 .2727 x 12
=108000
Add: unf. Variance
Actual labor cost
8400
=
116400
Total actual hours worked = 116400/12 = 9700 hours
e. labor price variance was $4470 favorable, find actual rate/ hour?
If 11/3 then:
121700 x12
= 1460400
Less fav . variance
=4470
Actual hours at actual cost = 1455930
Rate per hour = 1455930/121700 = 11.9632 per hour
If 3/11 then:
9700 x12
= 116400
Less fav . variance
=4470
Actual hours at actual cost = 111930
Rate per hour = 111930/9700 = 11.5392 per hour
f. total budgeted manufacturing overhead was $327,600 at normal capacity, find predetermined overhead rate/
labor hour?
327600/42000 = 7.8 per direct labor hour
g. find the standard cost/unit of product
If 11/3 then: 11/3 x7.8 =28.6 per unit or if 3/11 then:3/11 x7.8 = 2.127 per unit
h. find overhead applied to production
If 11/3 then: 121700 x7.8 =949260 (which seems very abnormal or if 3/11 then:9700 x7.8 = 75660 ( which
seems also unreasonable