Q1) Fort Wayne Fabricators, inc. utilizes a standard cost system to account for its single product. Standards established for product comprise following:
Materials ..........................8lbs. @ $0.05/lb
Labor.................................6hrs. @ $5.60/hr
Following operating data came from records for month:
In process, beginning inventory, none.
In process, ending inventory, 800 units, and 80% complete as to labor; material is issued at starting of processing.
Completed during the month, 5,600 units
Materials issued to production were 51,680 pounds @ $0.045 per pound.
Direct labor was $215,840 at rate of $5.68 per hour.
Compute variances given below
1. Materials price
2. Materials quantity
3. Net materials variance
4. Labour rate
5. Labour efficiency
6. Net labour variance