Sharp Company manufactures a product for which the following standards have been set: Standard Quantity or Hours
Question:
Sharp Company manufactures a product for which the following standards have been set:
Standard Quantity or Hours | Standard Price or Rate | Standard Cost | |||
---|---|---|---|---|---|
Direct materials | 3 | feet | $ 5 | per foot | $ 15 |
Direct labor | ? | hours | ? | per hour | ? |
During March, the company purchased direct materials at a cost of $60,885, all of which were used in the production of 3,500 units of product. In addition, 5,000 direct labor-hours were worked on the product during the month. The cost of this labor time was $42,500. The following variances have been computed for the month:
Materials quantity variance | $ 2,850 | U |
---|---|---|
Labor spending variance | $ 3,300 | U |
Labor efficiency variance | $ 800 | U |
Required:
1. For direct materials:
a. Compute the actual cost per foot of materials for March.
b. Compute the price variance and the spending variance.
2. For direct labor:
a. Compute the standard direct labor rate per hour.
b. Compute the standard hours allowed for the months production.
c. Compute the standard hours allowed per unit of product.