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[SOLVED] Question & Answer: 6 value: 10.00 points Sharp Company manufactures a product for which the following standards have been set: Standard…..

6 value: 10.00 points Sharp Company manufactures a product for which the following standards have been set: Standard Quantity Standard Price Standard or Hours 3 feet ? hours Cost $15 or Rate Direct materials Direct labor $5 per foot ? per hour During March, the company purchased direct materials at a cost of $42,660, all of which were used in the production of 2,250 units of product. In addition, 4,600 hours of direct labor time were worked on the product during the month. The cost of this labor time was $34,500. The following variances have been computed for the month: Materials quantity variance Labor spending variance Labor efficiency variance $1,800 U $3,000 U $ 700 U Required 1. For direct materials: a. Compute the actual cost per foot for materials for March. (Round your answer to 2 decimal places.) cost per foot b. Compute the price variance and the spending variance. (Do not round intermediate calculations. Indicate the effect of each variance by selecting F for favorable, U for unfavorable, and None for no effect (i.e., zero variance)) Price variance Spending variance

6 value: 10.00 points Sharp Company manufactures a product for which the following standards have been set: Standard Quantity Standard Price Standard or Hours 3 feet ? hours Cost $15 or Rate Direct materials Direct labor $5 per foot ? per hour During March, the company purchased direct materials at a cost of $42,660, all of which were used in the production of 2,250 units of product. In addition, 4,600 hours of direct labor time were worked on the product during the month. The cost of this labor time was $34,500. The following variances have been computed for the month: Materials quantity variance Labor spending variance Labor efficiency variance $1,800 U $3,000 U $ 700 U Required 1. For direct materials: a. Compute the actual cost per foot for materials for March. (Round your answer to 2 decimal places.) cost per foot b. Compute the price variance and the spending variance. (Do not round intermediate calculations. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance)) Price variance Spending variance

Expert Answer

 

1.a.For Direct materials

Units produced=2250

Standard quantity=3*2250=6750 feet

Standard Cost=6750*5=$33,750

Actual Cost=$42,660

Material Cost Variance=(42660-33750)=$8,910 U

SQ=Standard Quantity required

AQ=Actual Quantity used

SP=Standard price per unit

AP=Actual price per unit

Material cost Variance=SQ*(SP-AP)+AP* (SQ-AQ)=-8910

SQ=6750

SP=$5

6750*(5-AP)+AP*(SQ-AQ)=-8910

Materials Quantity Variance=AP*(SQ-AQ)

Materials Quantity Variance=$1,800 U

AP*(SQ-AQ)=-1800

6750(5-AP)-1800=-8910

6750(5-AP)=-8910+1800=-7110

5-AP=-7110/6750=-1.05333

AP=5+1.05333=$6.0533

AP=$6.05 per feet

Actual cost per foot of material=$6.05

Actual cost per foot of material $6.05

b. Price variance and spending variance:

Price Variance= SQ*(SP-AP)

SQ=Standard Quantity=6750, SP=Standard Price per unit=$5,AP=Actual Price per unit=$6.05

Price variance=6750*(5-6.05)=$7087.50 U

Spending variance=Standard Cost –Actual Cost=(6750*5)-42660=$8,910

Material Price Variance $   7,087.50 U
Spending Variance $   8,910.00 U

2. For Direct Labor

Labor spending Variance=$3,000U

Labor efficiency variance=$700 U

AH=Actual Hour=4600

Actual Labor cost=$34,500

SH=Standard Hour

AR=Actual Rate=(34500/4600)=$7.5 per hour

SR=Standard Rate

Spending variance=Standard labor cost-actual labor cost=-3000

-3000=Standard cost-34500

Standard cost=34500-3000=$31,500

Labor Efficiency variance=(SH-AH)*SR=-700

(SH-4600)*SR=-700

SH*SR=Standard cost=31500

SH*SR-4600SR=-700

31500-4600SR=-700

4600SR=31500+700=32200

SR=32200/4600=$7.00 per hour

Standard labor rate=$7.00 per hour

Standard Direct Labor rate per hour $            7.00

SH=31500/SR=31500/7=4,500 Hours

Standard Hour allowed =4,500 hours

Standard hours allowed for the months production 4500

Standard hours allowed per unit of product=4500/2250=2

Standard hours allowed per unit of production 2

sharp company manufactures a product for which the following standards have been set:

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