The following information describes production activities of the Midtown Corp.:Raw materials used ………………………16,000 lbs. at $4.05 per lb.Factory payroll …………………………5,545 hours for a total of $72,08530,000 units were completed during the yearBudgeted standards for each unit produced:1/2 lb. of raw material at $4.15 per lb.10 minutes of direct labor at $12.50 per hourCompute the direct materials price and quantity and the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.
What will be an ideal response?
| Direct materials: | ? | ? | ? |
| AQ ? AP | 16,000 pounds ? $4.05/pound……………….. | $64,800 | ? |
| AQ ? SP | 16,000 pounds ? $4.15/pound……………….. | 66,400 | ? |
| ? | Direct materials price variance………………. | $ 1,600 | F |
| ? | ? | ? | ? |
| AQ ? SP | 16,000 pounds ? $4.15/pound……………….. | $66,400 | ? |
| SQ ? SP | 15,000 pounds* ? $4.15/pound………………. | 62,250 | ? |
| ? | Direct materials quantity variance…………… | $ 4,150 | U |
| ? | ? | ? | ? |
| * 30,000 units ? | 1/2 pound/unit = 15,000 pounds | ? |
| ? | ? | ? | ? |
| Direct labor: | ? | ? | ? |
| AH ? AR | 5,545 hours ? $13.00/hour *…………………. | $72,085.00 | ? |
| AH ? SR | 5,545 hours ? $12.50/hour…………………… | 69,312.50 | ? |
| ? | Direct labor rate variance | $ 2,772.50 | U |
| ? | ? | ? | ? |
| * $72,085/5,545 | hours = $13.00/hour | ? |
| ? | ? | ? | ? |
| AH ? SR | 5,545 hours ? $12.50/hour…………………… | $69,312.50 | ? |
| SH ? SR | 5,000** hours ? $12.50/hour…………………. | 62,500.00 | ? |
| ? | Direct labor efficiency variance……………… | $ 6,812.50 | U |
| ? | ? | ? | ? |
| ** 30,000 units x | 1/6 hour per unit = 5,000 hours |
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