ACCT 2102 1st Edition Lecture 33 Outline of Last Lecture I Total DM Variance II Direct Labor Variance III DL Variances Example Outline of Current Lecture IV Comprehension Quiz Current Lecture Comprehension Quiz 8 Chapter 11 1 I Just Cleaned Up This Mess is a manufacturer of cleaning products During the period just ended 62 400 in direct materials purchased were used in production The direct material price variance for the period was 4 800 unfavorable the total direct material variance was 14 400 unfavorable The cost of direct material was expected to be 6 per pound 3 800 actual direct labor hours were logged during production The direct labor cost was expected to be 16 per unit of product Additional information related to direct labor is as follows Standard direct labor rate 8 per direct labor hour Direct labor efficiency variance 1 600 favorable Total direct labor variance 680 unfavorable a Total number of units produced during the period was b The standard quantity of material allowed to produce one unit of product was pounds per unit c The actual direct labor rate was per hour DM price qty purchased actual std DM price qty purch x actual qty purch x std 4 800 62 400 qty purch x 6 qty purch 9 600 lbs DM qty std qty used qty allowed 9 600 6 9 600 qty allowed qty allowed 8 000 lbs DM total DM price DM qty 14 400 4 800 DM qty DM qty 9 600 These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute DL rate hrs logged actual std 2 280 3 800 actual 8 actual 8 60 DL hr DL eff std hrs logged hrs allowed 1 600 8 3 800 2 output output 2 000 units DL total DL rate DL eff 680 1 600 DL rate DL rate 2 280 a Total number of units produced during the period was 2 000 b The standard quantity of material allowed to produce one unit of product was 4 pounds per unit c The actual direct labor rate was 8 60 per hour 2 Part of your company s accounting database was destroyed when Godzilla attacked the city Through careful recreation of data you have been able to determine that during the previous period 20 000 units of product were produced Raw Materials Inventory increased by 2 000 ounces during the period Reports show that the direct material price variance was a favorable 120 000 for the period and direct material variances was a favorable 40 000 The actual price paid for direct material during the period was 14 per pound which was 3 less per pound than expected The quantity allowed per unit of output was ounces Std price 17 14 3 Actual 14 DM price qty purch act std 120 000 qty purch 14 17 qty purch 40 000 qty used 40 000 2 000 38 000 DM qty std qty used qty allowed DM qty 17 38 000 20 000 output If it says RM Inv decreased then qty used 40 000 2 000 42 000 Total DM variance qty used x actual qty allowed x std 40 000 38 000 x 14 qty allowed x 17 qty allowed 33 647 qty allowed 20 000 x output 33 647 20 000 x output output 1 68 The quantity allowed per unit of output was 1 68 ounces 3 Are You Playing to Win LLC a manufacturer of motivational wall art uses standard costing for the single product the company makes and sells The following data are for the month of October Standard cost per DL hour Actual DL hours logged Labor efficiency variance DL input ratio Total labor variance 8 3 800 1 600 F 2 hours per unit 680 U The total number of units produced during October was DL total DL rate DL eff 680 DL rate 1 600 DL rate 2 280 DL rate hrs logged act std 2 280 3 800 act 8 actual 8 60 DL eff std hrs logged hrs allowed 1 600 8 3 800 2 output output 2 000 units The total number of units produced during October was 2 000
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