ABC company manufactures and sells product X. The standards for materials and labor costs to manufacture one unit of product X are as follows:
- Direct materials: 6lbs. @ $2 per lb.
- Direct labor: 1 hour @ $8 per hour
ABC company purchased 26,000 pounds of direct materials for $27,300 and manufactured 4,000 units of product X during January 2012.
The following variances data belong to the January 2012:
- Materials price variance: $2,600 Unfavorable
- Materials quantity variance: $2,000 Unfavorable
- Direct labor rate variance: $1,520 Unfavorable
- Direct labor efficiency variance: $1,600 Favorable
- Compute standard quantity of direct materials allowed (in pounds) for January production.
- Compute the actual quantity of materials used (in pounds) for January production.
- Compute the standard direct labor hours allowed for January production.
- Compute actual direct labor hours worked for January production.
- Compute actual direct labor rate.
(1) Standard quantity of direct materials allowed for January production:
Standard quantity of materials allowed = Actual production for January × Standard materials per unit
= 4,000 units × 6 lbs.
= 24,000 lbs.
(2) Actual quantity of direct materials used for January production:
(3) Standard direct labor hours allowed for January production:
Standard hours allowed for January production = Actual production for January × Standard hours per unit
= 4,000 units × 1 hours
= 4,000 hours