LO 8.1Sameerah is trying to determine the standard hours to make one unit. She has studied the manufacturing process and is trying to determine what portion of the employees’ time should be included in the standard time to make the product. She knows that the actual time the worker is assembling, cutting, and painting should be part of the standard hours. She is questioning whether setup, down time, rest periods, and cleanup should be part of the standard hours. Explain why you would or would not include these times.
LO 8.1Carl cleans offices. He has the following buildings to clean every day: building A, which is 12,500 square feet; building B, which is 24,500 square feet; building C, which is 10,500 square feet; and building D, which is 6,700 square feet. He is allowed 5 seconds per square foot. Each employee is allowed one 30-minute lunch per shift. How many employees will he need to hire?
LO 8.1Freidrich is working with the operations manager to determine what the standard material cost is for a spice chest. He has watched the process from start to finish and taken detailed notes on what material is used. The easiest material to measure is the wood. Each chest uses 5 board feet and produces 1.5 feet of scrap. He is not sure what to do with the scrap that is produced; the company cannot buy the boards in any other dimensions. What amount of materials should be included in the standard for material costs?
LO 8.2A company bought 45,000 pounds of plastic pellets to make DVDs at a cost of $9,900. The standard cost per pound for the pellets is 20.5 cents. Some of these pellets were used in three jobs. The first job called for 7,500 pounds but used 7,250 pounds. The second job called for 8,800 pounds but used 9,000 pounds. The third job called for 2,300 pounds but used 2,250 pounds. Compute the direct materials price variance and the direct materials quantity variance for each job and in total. Why would you want to calculate the direct materials quantity variance for each job?
LO 8.2Illinois Company is a medium-sized company that makes dresses. During the month of June, 8,575 dresses were made. All material purchases were used to make the dresses. The company had this information: standard per dress of 6 yards of material at $6.20 per yard. The actual quantity was 52,000 yards at a cost of $325,520. Compute the direct materials price variance, the direct materials quantity variance, and the total direct materials cost variance.
LO 8.2Corolla Manufacturing has a standard cost for steel of $20 per pound for a product that uses 4 pounds of steel. During September, Corolla purchased and used 4,200 pounds of steel to make 1,040 units. They paid $20.75 per pound for the steel. Compute the direct materials price variance, the direct materials quantity variance, and the total direct materials cost variance for the month of September. What would change if Corolla had made 2,200 units?
LO 8.3Marymount Company makes one product. In the month of April, it made 3,500 units. Workers were paid $32 per hour for labor, for a total of $718,848. The standard hours per unit are 6.4, and the standard labor wage rate is $38.40 per hour.
- What are the actual hours worked?
- What are the standard hours for the units made?
- What is the direct labor rate variance for April?
- What is the direct labor time variance for April?
- What is the total direct labor variance for April?
LO 8.3Adam Inc.’s records for May include the following information:
- What are Adam’s standard labor hours for the units made?
- What is Adam’s total standard labor cost for the units made?
LO 8.3Ribco’s labor cost information for making its only product for March is as follows:
- What is the direct labor rate variance?
- What is the direct labor time variance?
- What is the total direct labor variance?
LO 8.5Use the following standard cost card for 1 gallon of ice cream to answer the questions.
Actual direct costs incurred to make 50 gallons of ice cream:
- 275 quarts of cream at $1.05 per quart
- 832 ounces of sugar at $0.075 per ounce
- 165 minutes of labor at $37 per hour
All material used was bought during the current period.
- Compute the material and labor variances.
- Comment on the results and possible causes of the variances.
LO 8.5Use the following standard cost card for 1 gallon of ice cream to answer the questions.
Actual direct costs incurred to make 50 gallons of ice cream:
- 275 quarts of cream at $1.05 per quart
- 832 ounces of sugar at $0.075 per ounce
- 165 minutes of labor at $37 per hour
All materials used were bought during the current period.
- Compute the material and labor variances.
- Comment on the results and possible causes of the variances.