Comprehensive Problem #3

Below is a standard cost card for Product XYZ, manufactured by Jones Company.

	Standard quantity	Standard price
Direct Materials	6 ounces	$ .50 per ounce
Direct Labor	.5 direct labor hours	$30.00 per hour
Variable Manufacturing Overhead	.5 direct labor hours	$10.00 per hour

Additional information:

• Number of units produced 2,000
• Materials: 18,000 ounces were purchased for a total of $10,800, and 15,000 were used to produce the 2,000 units
• Labor: 950 direct labor hours were worked at a total cost of $29,450
• Manufacturing Overhead: Total variable manufacturing overhead costs incurred were $9,000

1. Compute (show work to receive credit):

a. Materials price and quantity variances

b. Labor rate, efficiency and spending variances

c. Manufacturing overhead rate, efficiency and spending variances (3 points)

2. Use the same standard costs and quantity for labor, but assume that instead of the 950 hours provided above, Jones production required 1000 hours to produce the 2,000 units. Also, assume that Jones labor rate variance was $3,000 Unfavorable.

Compute Jones (show work to receive credit):

a. Actual total direct labor cost

b. Actual per hour direct labor cost for Jones