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6 July, 15:20

The following data for the telephone company pertain to the production of 450 rolls of telephone wire during June. Selected items are omitted because the costing records were lost in a windstorm.

Direct Materials (All materials purchased were used)

Standard cost per roll: a pounds at $4.00 per pound

Total actual cost: b pounds costing $9600.

Standard cost allowed for units produced was $9000

Materials price variance: c

Materials efficiency variance was $80 unfavorable.

Direct Manufacturing Labor

Standard cost is 3 hours per roll at $8.00 per hour

Actual cost per hour was $8.25

Total actual cost: d

Labor price variance: e

Labor efficiency variance was $400 unfavorable.

Required:

Compute the missing elements in the report represented by the lettereditems.

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Answers (1)
  1. 6 July, 18:23
    0
    a. Standard Quantity = 2250

    b. Actual Quantity = 2570

    c. Material Price Variance = 680 Fav

    d. Total actual cost $ 10725

    e. Labor price variance $ 325

    Explanation:

    Telephone Company

    Direct Materials (All materials purchased were used)

    Standard cost per roll: a 2250 pounds at $4.00 per pound

    Total actual cost: b 2570 pounds costing $9600.

    Actual unit Price = $ 9600/2570 = $ 3.75

    Standard cost allowed for units produced was $9000

    Material Price Variance = (Actual Price * Actual Quantity) - (Standard Price * Actual Quantity)

    Material Price Variance = (3.75*2570) - 4*2570 = 9600 - 10280 = 680 Fav

    Material yield variance is also called Material Efficiency variance = (Actual unit usage - Standard unit usage) x Standard cost per unit

    $ 80 = (Actual units - $ 9000/$4) * $4

    $80 * 4 = (Actual units - 2250)

    320 + 2250 = Actual Units

    Actual Units = 2570

    Materials efficiency variance was $80 unfavorable.

    Direct Manufacturing Labor

    Standard cost is 3 hours per roll at $8.00 per hour

    Actual cost per hour was $8.25

    Total actual cost: 1300 hours * $8.25 = $ 10725

    Labor price variance: (actual hours * actual rate) - (actual hours * standard rate)

    Labor price variance = $ 10725 - 1300*8 = $ 10725-$ 10400 = $ 325

    Labor efficiency variance was $400 unfavorable = Standard Hours * Standard Rate - Actual Hours * Standard Rate

    400 = (3*450*8) - (Actual Hours * 8)

    10800-400 = (Actual Hours * 8)

    (Actual Hours) = 10400/8 = 1300
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