Gepp Manufacturing Company produces a single product. The following data apply to the standard cost of materials and labor associated with making the product: Materials quantity per unit 1 pound Materials price $ 12.50 per pound Labor quantity per unit 2 hours Labor price $ 22.50 per hour During the year, the company made 1,800 units of product. At the end of the year, the following variances had been calculated. Materials usage variance $ 1,000 Favorable Materials price variance $ 860 Unfavorable Labor usage variance $ 4,500 Unfavorable Labor price variance $ 7,125 Favorable Required Determine the actual amount of materials used. Determine the actual price paid per pound for materials. (Round your answer to 2 decimal places.) Determine the actual labor hours used. Determine the actual labor price per hour. (Round your answer to 2 decimal places.)

Question

Business

Tori Weiss

6 March, 06:39

Gepp Manufacturing Company produces a single product. The following data apply to the standard cost of materials and labor associated with making the product: Materials quantity per unit 1 pound Materials price $ 12.50 per pound Labor quantity per unit 2 hours Labor price $ 22.50 per hour During the year, the company made 1,800 units of product. At the end of the year, the following variances had been calculated. Materials usage variance $ 1,000 Favorable Materials price variance $ 860 Unfavorable Labor usage variance $ 4,500 Unfavorable Labor price variance $ 7,125 Favorable Required Determine the actual amount of materials used. Determine the actual price paid per pound for materials. (Round your answer to 2 decimal places.) Determine the actual labor hours used. Determine the actual labor price per hour. (Round your answer to 2 decimal places.)

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Answers (1)

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Isabella Stewart · Answer 1

Actual amount of material used = 1,720 pounds

Actual price paid per pound of material = $13

Actaul labour hours used = 2000hours

Actual labour price per hour = $18.94

Explanation:

Actual amount of material used will calculated using

material usage variance = (standard quantity - actual quantity) * standard price

$1000 = (1800 - AQ) * $12.50

1,000 = 22,500 - 12.50AQ

1,000 - 22,500 = - 12.50AQ

- 21,500 = - 12.50AQ

AQ = - 21500/-12.50 = 1,720

Note: Standard quantity = Actual production unit * standard quntity per unit

= 1,800 * 1 = 1,800 pounds

Actual price paid per unit of material

Material price variance = (standard price - Actual price) * actual quantity

-860 = ($12.50 - AP) 1,720

-860 = 21500 - 1720AP

-860 - 21500 = - 1720AP

-22,360 = - 1720AP

AP = - 22,360/-1720 = $13

Actual Labour hour used

Labour hours usages variance = (standard hour - actual hours) * standard rate per hour

-4500 = (1800 - AH) 22.50

-4500 = 40500 - 22.50AH

-4500 - 40500 = - 22.50AH

-45,000 = - 22.50AH

AH = - 45,000/-22.50

AH = 2000 hours

Actual labour price per hour

labour rate varaince = standard price - actual price) * actual quantuty

7125 = (22.50 - AP) * 2000

7125 = 45,000 - 2000AP

7125 - 45,000 = - 2000AP

-37875 = - 2000AP

AP = - 37875/-2000

AP = 18.9375 = 18.94