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Zeke's Bikes uses a standard cost system and provides the following information: Standards: 3 lbs of material per unit at a cost of $1.15 per pound. 2 direct labor hours per unit costing $11.25 per hour.   Actual: 2,500 lbs of material were purchased at a cost of $1.20 per pound. Employees worked 1,800 hours and were paid $10.75 per hour.   Zeke's Bikes produced a 1,000 bikes this period. 1. Calculate the direct materials cost variance and the direct materials efficiency variance.

Zeke's Bikes uses a standard cost system and provides the following information: Standards: 3 lbs of material per unit at a cost of $1.15 per pound. 2 direct labor hours per unit costing $11.25 per hour.   Actual: 2,500 lbs of material were purchased at a cost of $1.20 per pound. Employees worked 1,800 hours and were paid $10.75 per hour.   Zeke's Bikes produced a 1,000 bikes this period. 1. Calculate the direct materials cost variance and the direct materials efficiency variance.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Zeke's Bikes uses a standard cost system and provides the following information:

Standards:

3 lbs of material per unit at a cost of $1.15 per pound.
2 direct labor hours per unit costing $11.25 per hour.

 

Actual:

2,500 lbs of material were purchased at a cost of $1.20 per pound.
Employees worked 1,800 hours and were paid $10.75 per hour.

 

Zeke's Bikes produced a 1,000 bikes this period.



1. Calculate the direct materials cost variance and the direct materials efficiency variance.

(AC (AQ (AC ? (AQ ? ? SC) ? SQ) SC) ? SQ) ? ? AQ 2. Calculate the direct labor cost variance and the direct labor efficiency variance. ? SC AQ = SC = = = Direct Materials Cost Variance Direct Materials Efficiency Variance = Direct Labor Cost Variance Direct Labor = Efficiency Variance Favorable or Unfavorable Favorable or Unfavorable Favorable or Unfavorable Favorable or Unfavorable
Transcribed Image Text:(AC (AQ (AC ? (AQ ? ? SC) ? SQ) SC) ? SQ) ? ? AQ 2. Calculate the direct labor cost variance and the direct labor efficiency variance. ? SC AQ = SC = = = Direct Materials Cost Variance Direct Materials Efficiency Variance = Direct Labor Cost Variance Direct Labor = Efficiency Variance Favorable or Unfavorable Favorable or Unfavorable Favorable or Unfavorable Favorable or Unfavorable
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