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30 Sep 2019

Why the standard price and quantity for each product cost are separated?

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Keith Leannon
Keith LeannonLv2
13 Sep 2019

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The standard price and quantity of direct materials are separated because

a. GAAP and IFRS reporting requires separation

b. Direct materials prices are controlled by the purchasing department, and quantity used is controlled by the production department

c. Standard prices are more difficult to estimate than standard quantities

d. Standard quantities change more frequently than standard prices

Lewis Company’s standard labor cost of producing one unit of Product DD is 3.9 hours at the rate of $13.0 per hour. During August, 42,000 hours of labor are incurred at a cost of $13.20 per hour to produce 10,600 units of Product DD. (a) Compute the total labor variance. Total labor variance $ (b) Compute the labor price and quantity variances. Labor price variance $ Labor quantity variance $ (c) Compute the labor price and quantity variances, assuming the standard is 4.2 hours of direct labor at $13.40 per hour. Labor price variance $ Labor quantity variance

1.)Marcus Company uses both standards and budgets. For the year,estimated production of Product X is 495,400 units. Total estimatedcost for materials and labor are $1,015,570 and $1,857,750. Computethe estimates for (a) a standard cost and (b) a budgetedcost.
Materials Labor
A.)Standard Cost $ $
B.)Bugeted Cost $ $

2.)Nien Company accumulates the following data concerning rawmaterials in making one gallon of finished product: (1) Price-netpurchase price $2.50, freight-in $0.40 and receiving and handling$0.40. (2) Quantity-required materials 2.6 pounds, allowance forwaste and spoilage 0.4 pounds. Compute the following.
A.)Standard direct materials price per gallon.? $
B.)Standard direct materials quantity per gallon.? Pounds
C.)Total standard materials cost per gallon. ? $

3.)Labor data for making one gallon of finished product in NienCompany are as follows: (1) Price-hourly wage rate $13.80, payrolltaxes $0.80, and fringe benefits $1.50. (2) Quantity-actualproduction time 1.1 hours, rest periods and clean up 0.30 hours,and setup and downtime 0.40 hours. Compute the following.
A.)Standard direct labor rate per hour. ? $
B.)Standard direct labor hours per gallon. ? Hours
C.)Standard labor cost per gallon. ? $



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