The managers of Nakatani Enterprises established the following standards for Model 535:

Last month, 15,342 units of Model 535 were produced at a cost of $26,870 for direct materials and $47,000 for direct labor. A total of 13,252 pounds of direct materials was used. Total direct labor hours amounted to 2,730 hours. During the same period, 11,000 pounds of direct material were purchased for $21,730. The company’s policy is to record materials price variances at the time materials are purchased.

A. What is the total standard cost for direct materials and direct labor for the output this period?
B. What was the direct materials price variance?
C. What was the direct materials efficiency variance?
D. What was the direct labor price variance?
E. What was the direct labor efficiency variance?
F. Identify any variances that are material (greater than 10% of total direct cost at standard). Discuss whether you would investigate thesevariances.

  • CreatedJanuary 26, 2015
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