Topaz Company makes one product and has set th

P11-13 Topaz Company makes one product and has set the following standards for materials and labor:

                                                            Direct               Direct

Materials          Labor

Standard quantity or hours per unit . . . .          ? pounds          2.5 hours

Standard price or rate . . . . . . . . . . . . . .           ? per pound     $9.00 per hour

Standard cost per unit . . . . . . . . . . . . . .          ?                      $22.50

During the past month, the company purchased 6,000 pounds of direct materials at a cost of $16,500. All of this material was used in the production of 1,400 units of product. Direct labor cost totaled $28,500 for the month. The following variances have been computed:

Materials quantity variance . . . . . . . . . . . . . . . $1,200 U

Total materials spending variance . . . . . . . . . . $300 F

Labor efficiency variance . . . . . . . . . . . . . . . . . $4,500 F

Required:

1. For direct materials:

a. Compute the standard price per pound for materials.

b. Compute the standard quantity allowed for materials for the month’s production.

c. Compute the standard quantity of materials allowed per unit of product.

2. For direct labor:

a. Compute the actual direct labor cost per hour for the month.

b. Compute the labor rate variance.

(Hint: In completing the problem, it may be helpful to move from known to unknown data either by using the variance formulas or by using the columnar format shown in Exhibits 10–5 and 10–6 .)

TUTORIAL PREVIEW

1. a. Materials price variance = AQ (AP – SP)

      6,000 pounds ($2.75 per pound* – SP) = $1,500 F**

      $16,500 – 6,000 pounds × SP = $1,500***

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