Question
Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing. Each of the products uses two raw materialsX442 and
Mickley Corporation produces two products, Alpha6s and Zeta7s, which pass through two operations, Sintering and Finishing. Each of the products uses two raw materialsX442 and Y661. The company uses a standard cost system, with the following standards for each product (on a per unit basis):
| Raw Material |
| Standard Labor Time | ||
Product | X442 | Y661 |
| Sintering | Finishing |
Alpha6 | 1.8 kilos | 2.0 liters |
| 0.20 hours | 0.80 hours |
Zeta7 | 3.0 kilos | 4.5 liters |
| 0.35 hours | 0.90 hours |
Information relating to materials purchased and materials used in production during May follows:
Material | Purchases | Purchase Cost | Standard Price | Used in Production | |||
X442 | 14,500 | kilos | $52,200 | $3.50 | per kilo | 8,500 | kilos |
Y661 | 15,500 | liters | $20,925 | $1.40 | per liter | 13,000 | liters |
The following additional information is available:
- The company recognizes price variances when materials are purchased.
- The standard labor rate is $19.80 per hour in Sintering and $19.20 per hour in Finishing.
- During May, 1,200 direct labor-hours were worked in Sintering at a total labor cost of $27,000, and 2,850 direct labor-hours were worked in Finishing at a total labor cost of $59,850.
- Production during May was 1,500 Alpha6s and 2,000 Zeta7s.
2. Compute the materials price and quantity variances for each material.
3. Compute the labor rate and efficiency variances for each operation.
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