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Stefani Company has gathered the following information about
its product. Direct materials. Each unit of product contains 4.5
pounds of materials. The average waste and spoilage per unit
produced under normal conditions is 0.5 pounds. Materials cost
$5 per pound, but Stefani always takes the 2% cash discount all
of its suppliers offer. Freight costs average $0.25 per pound.
Direct labor. Each unit requires 2 hours of labor. Setup,
cleanup, and downtime average 0.4 hours per unit. The average
hourly pay rate of Stefani's employees is $12. Payroll taxes and
fringe benefits are an additional $3 per hour. Manufacturing
overhead. Overhead is applied at a rate of $7 per direct labor
hour.
Instructions
a. Compute Stefani's total standard cost per unit.
E11-6
Lewis Company's standard labor cost of producing one unit of
Product DD is 4 hours at the rate of $12.00 per hour. During
August, 40,600 hours of labor are incurred at a cost of $12.15
per hour to produce 10,000 units of Product DD.
Instructions
a. Compute the total labor variance.
b. Compute the labor price and quantity variances.
c. Repeat (b), assuming the standard is 4.1 hours of direct labor
at $12.25 per hour.
E11-12
Byrd Company produces one product, a putter called GO-
Putter. Byrd uses a standard cost system and determines that it
should take one hour of direct labor to produce one GO-Putter.