Question

Dash Company adopted a standard costing system several years ago. The standard costs for the prime costs (i.e., direct materials and direct labor) of its single product are:
Material (5 kilograms × $6.00 per kilogram) $ 30.00
Labor (5 hours × $19.60 per hour) 98.00
All materials are added at the beginning of processing. The following data were taken from the company’s records for November:
In-process beginning inventory None
In-process ending inventory 600 units, 70% complete as to direct labor
Units completed 6,700 units
Budgeted output 7,100 units
Purchases of materials 61,000 kilograms
Total actual direct labor costs $ 620,000
Actual direct labor hours 34,200 hours
Materials usage variance $ 2,700 Unfavorable
Total materials variance $ 750 Unfavorable
Required:
1. Compute for November:
a. The direct labor efficiency variance. Is this variance favorable (F) or unfavorable (U)?
b. The direct labor rate variance. Is this variance favorable (F) or unfavorable (U)?
c. The actual number of kilograms of material used in the production process during the month.
d. The actual price paid per kilogram of material during the month, the company calculates the direct materials price variance at point of purchase.
e. The amount of direct materials cost and direct labor cost transferred to the Finished Goods Inventory account.
f. The total amount of direct materials cost and direct labor cost in the Work-in-Process Inventory account at the end of the month.

Answer 1

Answer:

a- $27,400 (favorable)

b- $50,320 (favorable)

c- 36,950 kg

d- $5.968 per kg

e- $857600

f- $55,800

Explanation:

a- Labor efficiency variance = SP ×(AQ −SQ)

b- Labor rate (price) variance = (AP ×AQ) −(SP ×AQ)

c- Actual kgs. Of material used in November = std. quantity allowed +/- efficiency variance

d-   Materials price variance = total materials variance −materials usage variance

then calculate

ctual price per kg. (AP) = Std. price per kg. (SP) −Per unit favorable price variance

e- Total amount of "prime costs" transferred to the finished goods inventory account = Std. manufacturing cost/unit ×#units manufactured

f- Equivalent units in ending WIP Inventory x Standard cost per equivalent units the add the sum for Materials and Labor.