PROBLEM TWO

Gabby Company began the manufacture of new paging machines. The company installed a standard costing system to account for manufacturing costs. The standard cost per unit is:

Direct materials 3 pound @ $5 per pound

Direct labor .5 hours @ $20 per direct labor hour

Variable overhead 75% of direct labor cost

Actual production was 4,000 units; actual sales were 2,500 units.

There is no beginning inventory for direct materials.

Other data are:

1. Materials price variance is $3,250 unfavorable.
2. Materials efficiency variance is $2,500 unfavorable.
3. Direct labor rate variance is $1,900 unfavorable.
4. Direct labor efficiency variance is $2,000 favorable.
5. Revenue was $125,000.
6. Purchases of direct materials is $68,250.
7. Actual variable overhead is $29,000.

REQUIRED:

1. Determine the following factors:

1. standard hours allowed for actual production
2. actual direct labor hours worked
3. actual direct labor wage rate per hour
4. standard quantity of materials allowed for production
5. actual quantity of materials used
6. actual quantity of direct materials purchased
7. actual direct materials price per pound