Question

Petersen Corp. manufactures and sells a single product. The company uses a standard cost system. The standard cost per unit of product follows:
Materials­1 lb plastic @ $3.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3.00
Direct labor­1.6 hr @ $10.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.00
Factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.45
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $23.45
The charges to the manufacturing department for November, when 5,000 units were produced, follow:
Materials­5,300 lb @ $3.00. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,900
Direct labor­8,200 hr @ $9.80 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,360
Factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,815
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... $120,075
The Purchasing department normally buys about the same quantity as is used in production during a month. In November, 5,500 lb were purchased at a price of $2.90 per pound.

Required:
Calculate the following variances from standard costs for the data given, using the formulas on pages 402 and 403:
1. Materials quantity.
2. Materials purchase price (at time of purchase).
3. Labor efficiency.
4. Labor rate.



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  • CreatedMay 05, 2014
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