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Problem 10-9 (continued)
2. Many students will miss parts 2 and 3 because they will try to use
product
costs as if they were
hourly
costs. Pay particular attention to
the computation of the standard direct labor time per unit and the
standard direct labor rate per hour.
Actual Hours of
Input, at the
Actual Rate
Actual Hours of
Input, at the
Standard Rate
Standard Hours
Allowed for Output,
at the Standard Rate
(AH × AR)
(AH × SR)
(SH × SR)
2,800 hours ×
$6.00 per hour*
3,000 hours** ×
$6.00 per hour*
$18,200
= $16,800
= $18,000
Rate Variance,
$1,400 U
Efficiency Variance,
$1,200 F
Spending Variance,
$200 U
*
2,850 standard hours ÷ 1,900 sets = 1.5 standard hours per set,
$9.00 standard cost per set ÷ 1.5 standard hours per set =
$6.00 standard rate per hour.
**
2,000 sets × 1.5 standard hours per set = 3,000 standard hours.
Alternatively, the variances can be computed using the formulas:
Labor rate variance = AH (AR – SR)
Problem 10-10 (45 minutes)
1.
Standard
Quantity or
Hours
Standard Price
or Rate
Standard
Cost
Alpha6:
Direct materials—X442 ......
1.8 kilos
$3.50 per kilo
$ 6.30
Direct materials—Y661 ......
2.0 liters
$1.40 per liter
2.80
Direct labor—Sintering .......
0.20 hours
$19.80 per hour
3.96
Direct labor—Finishing .......
0.80 hours
$19.20 per hour
15.36
Total ................................
$28.42
Zeta7:
Direct materials—X442 ......
3.0 kilos
$3.50 per kilo
$10.50
Direct materials—Y661 ......
4.5 liters
$1.40 per liter
6.30
Direct labor—Sintering .......
0.35 hours
$19.80 per hour
6.93
Direct labor—Finishing .......
0.90 hours
$19.20 per hour
17.28
Total ................................
$41.01
