Assignment

Rene is working with the operations manager to determine what the standard labor cost is for a spice chest. He has watched the process from start to finish and taken detailed notes on what each employee does. The first employee selects and mills the wood, so it is smooth on all four sides. This takes the employee 1 hour for each chest. The next employee takes the wood and cuts it to the proper size. This takes 30 minutes. The next employee assembles and sands the chest. Assembly takes 2 hours. The chest then goes to the finishing department. It takes 1.5 hours to finish the chest. All employees are cross-trained so they are all paid the same amount per hour, $17.50.

P1. What are the standard hours per chest?

P2. What is the standard cost per chest for labor?

Use the following standard cost card for one ladder to answer the following questions:

STANDARD COST CARD

Product: Walter Ladder

Manufacturing Cost Information	Standard Quantity	Standard Price	Cost Summary
Direct Materials	5 pounds	$3.60 per pound	$18.00
Direct Labor	1.25 hours	$12.00 per hour	$15.00
Total Direct Costs			$33.00

Walter Ladders made 3,000 ladders in July and used 15,500 pounds of material to make these units. Walter Ladders paid $39,370 for the 15,500 pounds of material.

P3. What was the direct materials price variance for July?

P4. What was the direct materials quantity variance for July?

P5. What is the total direct materials cost variance?