Principles of Accounting II

Chapters 22, 23 and 25

Direct Materials and Direct Labor Variance Analysis Lenni Clothing Co. manufactures clothing in a small manufacturing facility. Manufacturing has 25 employees. Each employee presently provides 40 hours of productive labor per week. Information about a production week is as follows: Standard wage per hr. $12.00 Standard labor time per unit 12 min. Standard number of yds of fabric per unit 5.0 yds. . Standard price per yd. of fabric $5.00 Actual price per yd. of fabric $5.10 Actual yds. of fabric used during the week 26,200 yds. Number of units produced during the week 5,220 Actual wage per hr. $11.80 $ Actual hrs. for the week 1,000 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 25 Direct labor standard cost per unit 2.40 Total standard cost per unit 27.4 b. Determine the price variance, quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. . Price variance 2,620 Unfavorable Quantity variance 500 Unfavorable Total direct materials cost variance 3,120 Unfavorable c. Determine the rate variance, time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number Rate variance 12.00 X Favorable Time variance 1,044 X Favorable Total direct labor cost variance $ 12,528 x Favorable