During July 2013, Pull-Along worked on two production runs (Jobs # 918 and # 2002) of the same product, a trailer hitch component. Job # 918 consisted of 1,200 units of the product, and Job # 2002 contained 2,000 units. The hitch components are made from sheet metal. Because this component is routinely produced for one of Pull-Along’s long-term customers, standard costs have been developed for its production. The standard cost of material for each unit is $ 18; each unit contains six pounds of material at standard. The standard direct labor time per unit is 12 minutes for workers earning a standard rate of $ 20 per hour. The actual costs recorded for each job were as follows:

a. What is the standard direct cost of each trailer hitch component?
b. What was the total standard direct cost assigned to each of the jobs?
c. Compute the variances for direct material and for direct labor for each job.
d. Why should variances be computed separately for each job rather than for the aggregate annual trailer hitch componentproduction?

  • CreatedJune 03, 2014
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