Chapter 13, Problem 13.4P

### Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

Chapter
Section

### Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

# Direct materials and direct labor variance analysis Faucet Industries Inc. manufactures faucets in a small manufacturing facility. The faucets are made from zinc. Faucet Industries has 60 employees. Each employee presently provides 36 hours of labor per week. Information about a production week is as follows: InstructionsDetermine (a) the standard cost per unit for direct materials and direct labor; (h) the price variance, quantity variance, and total direct materials cost variance; and (c) the rate variance, time variance, and total direct labor cost variance.

To determine

(a)

Concept Introduction:

Standard cost is an accounting system which is used by manufacturers to know the difference between actual cost and standard cost of product.

To Compute:

The standard cost per unit for direct material and direct labor.

Explanation

Details of material and labour are given in following table:

 Materials and Labours Particulars Standard Quantity Standard Price(per unit) Standard Cost Actual Quantity Actual Price(Per unit) Actual cost Material (lbs) 9,600 $1.25$12,000 10,200 $1.40$14,280 Labour (hrs) 2,400 $18$43,200 2,160 \$18
To determine

(b)

Concept Introduction:

Standard cost is an accounting system which is used by manufacturers to know the difference between actual cost and standard cost of product.

To Compute:

The price variance, quantity variance and cost variance direct material.

To determine

(c)

Concept Introduction:

Standard cost is an accounting system which is used by manufacturers to know the difference between actual cost and standard cost of product.

To Compute:

The rate variance, time variance and cost variance of direct labour.

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