Question #2
|
Expected production (units) |
30,000 |
|
Standard DML hours per unit |
7.00 |
|
Standard DML rate per hour |
$25.00 |
|
Standard pounds of DM usage per |
4.00 |
|
Standard DM price per pound |
$15 |
|
Actual |
|
|
Units produced |
27,000 |
|
DML hours worked |
202,500 |
|
Total cost of DML |
$4,860,000 |
|
Pounds of DM purchased |
118,000 |
|
Total cost of DM purchased |
$1,858,500 |
|
Pounds of DM used |
101,250 |
a)
Calculate the following variances:
Direct manufacturing labor rate
variance
Direct manufacturing labor usage
variance
Direct
materials price variance
Direct materials usage variance
b)
Explain what each of the calculated variances imply about the firm’s
operations. Be specific!
Direct manufacturing labor rate
variance
Direct manufacturing labor usage
variance
Direct materials price variance
Direct materials usage variance
