Managerial Accounting
11-3
Stefani Company has gathered the following information about its product.
Direct materials: Each unit of product contains 4.50 pounds of materials. The average waste and spoilage per unit produced under normal conditions is 1.50 pounds. Materials cost $3 per pound, but Stefani always takes the 5.00% cash discount all of its suppliers offer. Freight costs average $0.30 per pound.
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Order Paper NowDirect labor. Each unit requires 1.70 hours of labor. Setup, cleanup, and downtime average 0.20 hours per unit. The average hourly pay rate of Stefani’s employees is $13.10. Payroll taxes and fringe benefits are an additional $3.40 per hour.
Manufacturing overhead. Overhead is applied at a rate of $4.50 per direct labor hour.
Compute Stefani’s total standard cost per unit. (Round answer to 2 decimal places, e.g. 1.25.)
Total standard cost per unit
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11-6 |
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Lewis Company’s standard labor cost of producing one unit of Product DD is 3.70 hours at the rate of $12.90 per hour. During August, 40,600 hours of labor are incurred at a cost of $13.00 per hour to produce 10,800 units of Product DD.
(a) Compute the total labor variance.
(b) Compute the labor price and quantity variances.
(c) Compute the labor price and quantity variances, assuming the standard is 4.10 hours of direct labor at $13.20 per hour.
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