Question

Gepp Manufacturing Company produces a single product. The following data apply to the standard cost of materials and labor associated with making the product: Materials quantity per unit 1 pound Materials price $ 12.50 per pound Labor quantity per unit 2 hours Labor price $ 22.50 per hour During the year, the company made 1,800 units of product. At the end of the year, the following variances had been calculated. Materials usage variance $ 1,000 Favorable Materials price variance $ 860 Unfavorable Labor usage variance $ 4,500 Unfavorable Labor price variance $ 7,125 Favorable Required Determine the actual amount of materials used. Determine the actual price paid per pound for materials. (Round your answer to 2 decimal places.) Determine the actual labor hours used. Determine the actual labor price per hour. (Round your answer to 2 decimal places.)

Answer 1

Answer:

Actual amount of material used = 1,720 pounds

Actual price paid per pound of material =  $13

Actaul labour hours  used =   2000hours

Actual labour price per hour =   $18.94

Explanation:

Actual amount of material used will calculated using

material usage variance = (standard quantity - actual quantity)*standard price

                 $1000 =    ( 1800 -  AQ)* $12.50

                 1,000 =  22,500 - 12.50AQ

                 1,000 - 22,500 = - 12.50AQ

                - 21,500 = -12.50AQ

              AQ = -21500/-12.50 =  1,720

Note: Standard quantity = Actual production unit * standard quntity per unit

                                       =  1,800 * 1 =  1,800 pounds

Actual price paid per unit of material

Material price variance =  (standard price - Actual price)*actual quantity

-860    =   ($12.50 - AP) 1,720

-860 =  21500 - 1720AP

-860 -21500 = -1720AP

-22,360 = -1720AP

AP  =  -22,360/-1720 =  $13

Actual Labour hour used

Labour hours usages variance =  (standard hour - actual hours)* standard rate per hour

 -4500  = ( 1800 - AH) 22.50

-4500 = 40500 -22.50AH

-4500 -40500 = -22.50AH

 -45,000 = -22.50AH

AH = -45,000/-22.50

AH = 2000 hours

Actual labour price per hour

labour rate varaince =  standard price - actual price )*actual quantuty

7125  =   (  22.50  -  AP)*2000

7125  =  45,000 - 2000AP

7125 - 45,000 = -2000AP

-37875  = -2000AP

AP = -37875/-2000

AP = 18.9375 = 18.94