Direct Materials and Direct Labor Variance Analysis

Abbeville Fixture Company manufactures units in a small manufacturing facility. The units are made from brass. Manufacturing has 40 employees. Each employee presently provides 35 hours of labor per week. Information about a production week is as follows:

Standard wage per hour	$17.4
Standard labor time per unit	15 min.
Standard number of lbs. of brass	1.5 lbs.
Standard price per lb. of brass	$11.25
Actual price per lb. of brass	$11.5
Actual lbs. of brass used during the week	12,978 lbs.
Number of units produced during the week	8,400
Actual wage per hour	$17.92
Actual hours for the week (40 employees 35 hours)	1,400 hrs.

Required:

a. Determine the standard cost per unit for direct materials and direct labor. Round the cost per unit to two decimal places.

Direct materials standard cost per unit	$
Direct labor standard cost per unit	$
Total standard cost per unit	$

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Factory Overhead Variance Corrections

The data related to Shunda Enterprises Inc.s factory overhead cost for the production of 20,000 units of product are as follows:

Actual:	Variable factory overhead	$86,100
	Fixed factory overhead	62,100
Standard:	30,000 hrs. at $5 ($2.90 for variable factory overhead)	150,000

Productive capacity at 100% of normal was 28,900 hours, and the factory overhead cost budgeted at the level of 30,000 standard hours was $149,100. Based on these data, the chief cost accountant prepared the following variance analysis:

Variable factory overhead controllable variance:
Actual variable factory overhead cost incurred	$86,100
Budgeted variable factory overhead for 30,000 hours	87,000
Variancefavorable			$(900)
Fixed factory overhead volume variance:
Normal productive capacity at 100%	28,900	hrs.
Standard for amount produced	30,000
Productive capacity not used	1,100	hrs.
Standard variable factory overhead rate	x $5
Varianceunfavorable			5,500
Total factory overhead cost varianceunfavorable			$4,600

Compute the following to assist you in identifying the errors in the factory overhead cost variance analysis. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your interim computations to the nearest cent, if required.

Variance	Amount	Favorable/Unfavorable
Variable Factory Overhead Controllable Variance	$	Favorable
Fixed Factory Overhead Volume Variance	$	Favorable
Total Factory Overhead Cost Variance	$	Favorable