Direct Materials and Direct Labor Variances
P 3. Winners Trophy Company produces a variety of athletic awards, most of them in the form of trophies. Its deluxe trophy stands 3 feet tall above the base. The company’s direct materials standards for the deluxe trophy include 1 pound of metal and 8 ounces of wood for the base. Standard prices for the year were $3.30 per pound of metal and $0.45 per ounce of wood. Direct labor standards for the deluxe trophy specify 0.2 hour of direct labor in the Molding Department and 0.4 hour in the Trimming/Finishing Department. Standard direct labor rates are $10.75 per hour in the Molding Department and $12.00 per hour in the Trimming/Finishing Department. During January, the company made 16,400 deluxe trophies. Actual production data are as follows:
|
Direct materials |
|
|
Metal |
16,640 pounds @ $3.25 per pound |
|
Wood |
131,400 ounces @ $0.48 per ounce |
|
Direct labor |
|
|
Molding |
3,400 hours @ $10.60 per hour |
|
Trimming Finishing |
6,540 hours @ $12.10 per hour |
Required
1. Compute the direct materials price and quantity variances for metal and wood.
2. Compute the direct labor rate and efficiency variances for the Molding and the Trimming/Finishing Departments.