The following data for the Prender Company pertain to the production of 800 urns during August
Direct Materials (all materials purchased were used):
Standard cost: $4.80 per pound of urn.
Total actual cost: $4,480.
Standard cost allowed for units produced was $4,800.
Materials efficiency variance was $96 unfavorable.
Direct Manufacturing Labor:
Standard cost is 2 urns per hour at $19.20 per hour.
Actual cost per hour was $19.60.
Labor efficiency variance was $288 favorable.
Required:
a. What is standard direct material amount per urn?
b. What is the direct material price variance?
c. What is the total actual cost of direct manufacturing labor?
d. What is the labor price variance for direct manufacturing labor?
Answer:
a. Standard cost per urn = $4,800 / 800
= $6.00 per urn
Standard number of pounds per urn = $6.00 / $4.80
= 1.25 pound per urn
b. Materials price variance = Total variance - efficiency variance
= ($4,480 − $4,800) − $96 unfavorable
= $416 favorable
c. Total standard labor cost of actual hours = ((800/2) × $19.2) − $288 favorable
= $7,392
Actual hours = $7,392/19.2 = 385 hours
Total actual costs = 385 × $19.60 = $7,546
d. Labor price variance = $7,546 − $7,392
= $154 unfavorable
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