FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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I need help with problems 1 a-b, and 2-a-c. Part of 1 b is cut off, to clarify it says that I need to solve for the "price variance" and the "spending variance." Thanks for the help in advance!
Transcribed Image Text:**Cost Variance Analysis for Sharp Company**
---
Sharp Company manufactures a product for which the following standards have been set:
| **Standard Quantity or Hours** | **Standard Price or Rate** | **Standard Cost** |
|--------------------------------|----------------------------|-------------------|
| Direct materials | 3 feet | $5 per foot | $15 |
| Direct labor | ? hours | ? per hour | ? |
---
**March Performance Data:**
During March, the company purchased direct materials at a cost of $45,210, all of which were used in the production of 2,500 units of product. Additionally, 4,100 hours of direct labor time were worked on the product during the month. The cost of this labor time was $30,750. The following variances have been computed for the month:
| **Variance** | **Amount** |
|--------------------------------|--------------|
| Materials quantity variance | $3,600 U |
| Labor spending variance | $2,750 U |
| Labor efficiency variance | $700 U |
**Required Analysis:**
1. **For direct materials:**
a. Compute the actual cost per foot for materials for March. (Round your answer to 2 decimal places.)
**Computation:**
- Actual cost per foot = $2.75 per foot
---
**Diagram Explanation:**
The analysis includes cost variances represented in monetary terms. "U" indicates an "Unfavorable" variance, meaning the actual costs were higher than the standard costs.
1. **Materials Quantity Variance:** Indicates that the company used more materials than expected.
2. **Labor Spending Variance:** Reflects higher labor costs than anticipated.
3. **Labor Efficiency Variance:** Shows that more labor hours were needed than planned.
---
### Additional Considerations
b. Compute the price variance and the spending variance (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance)).
![### Direct Labor Standard Calculations
#### 2. For direct labor:
*(Do not round intermediate calculations.)*
**a. Compute the standard direct labor rate per hour.** *(Round your final answer to 2 decimal places.)*
- **Standard direct labor rate per hour**: [ **Input box** ]
**b. Compute the standard hours allowed for the month’s production.**
- **Standard hours**: [ **Input box** ] hours
**c. Compute the standard hours allowed per unit of product.** *(Round your answer to 1 decimal place.)*
- **Standard hours**: [ **Input box** ] hours per unit](https://content.bartleby.com/qna-images/question/bd5f09cd-4131-4fee-9e87-e470eaf7d034/f54f0dbf-f503-4147-a05d-2c30b30bd44c/6wp2t86.jpeg)
Transcribed Image Text:### Direct Labor Standard Calculations
#### 2. For direct labor:
*(Do not round intermediate calculations.)*
**a. Compute the standard direct labor rate per hour.** *(Round your final answer to 2 decimal places.)*
- **Standard direct labor rate per hour**: [ **Input box** ]
**b. Compute the standard hours allowed for the month’s production.**
- **Standard hours**: [ **Input box** ] hours
**c. Compute the standard hours allowed per unit of product.** *(Round your answer to 1 decimal place.)*
- **Standard hours**: [ **Input box** ] hours per unit
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