The following standard costs were developed for one of the products of CH Industries: STANDARD COST CARD
Question:
The following standard costs were developed for one of the products of CH Industries:
STANDARD COST CARD
PER UNIT
Direct materials: 6 meters at $2 per meter $12.00
Direct labor : 5 hours at $3 per hour $15.00
The following were actual information regarding the company's operations for the period:
Units produced 20,000 units
Materials purchased 130,000 meters at $2.05 per meter
Materials used 110,000 meters
Direct labor 115,000 hours at $3.10 per hour
A. Calculate the materials price variance and indicate whether it is favorable or unfavorable. Determine whether the cost variance is significant.
B. Calculate the materials usage variance and indicate whether it is favorable or unfavorable. Determine whether the cost variance is significant.
C. Calculate the labor rate variance and indicate whether it is favorable or unfavorable. Determine whether the cost variance is significant.
D. Calculate the labor efficiency variance and indicate whether it is favorable or unfavorable. Determine whether the cost variance is significant.
E. Identify one possible cause for each of the significant cost variances and recommend appropriate corrective actions.
Expert Answer:
Lets calculate each variance and determine whether its favorable or unfavorable and whether its significant A Materials Price Variance Actual material ... View the full answer
