Sonic, Inc. is planning to produce 2,500 units of product in 2013. Each unit requires

3 pounds of materials at $6 per pound and a half hour of labor at $16 per hour. The overhead rate is 75% of direct labor.

**Instructions**

(a) Compute the budgeted amounts for 2013 for direct materials to be used, direct labor, and applied overhead.

(b) Compute the standard cost of one unit of product.

##### Ex. 202

Pane Corp. manufactures and sells a nutrition drink for children. It wants to develop a standard cost per gallon. The following are required for production of a 100 gallon batch:

1,960 ounces of lime Kool-Drink at $.12 per ounce

40 pounds of granulated sugar at $.60 per pound

63 kiwi fruit at $.50 each

100 protein tablets at $.90 each

4,000 ounces of water at $.003 per ounce

Pane estimates that 2% of the lime Kool-Drink is wasted, 20% of the sugar is lost, and 10% of the kiwis cannot be used.

**Instructions**

Compute the standard cost of the ingredients for one gallon of the nutrition drink.

##### Ex. 203

Engines Done Right Co. is trying to establish the standard labor cost of a typical engine tune-up. The following data have been collected from time and motion studies conducted over the past month.

Actual time spent on the tune-up 1.0 hour

Hourly wage rate $16

Payroll taxes 10% of wage rate

Setup and downtime 10% of actual labor time

Cleanup and rest periods 20% of actual labor time

Fringe benefits 25% of wage rate

**Instructions**

(a) Determine the standard direct labor hours per tune-up

(b) Determine the standard direct labor hourly rate.

(c) Determine the standard direct labor cost per tune-up.

(d) If a tune-up took 1.5 hours at the standard hourly rate, what was the direct labor quantity variance?

##### Ex. 204

Riggins, Inc. manufactures one product called tybos. The company uses a standard cost system and sells each tybo for $8. At the start of monthly production, Riggins estimated 9,500 tybos would be produced in March. Riggins has established the following material and labor standards to produce one tybo:

Standard Quantity Standard Price

Direct materials 2.5 pounds $3 per pound

Direct labor 0.6 hours $10 per hour

During March 2013, the following activity was recorded by the company relating to the production of tybos:

1. The company produced 9,000 units during the month.

2. A total of 24,000 pounds of materials were purchased at a cost of $66,000.

3. A total of 24,000 pounds of materials were used in production.

4. 5,000 hours of labor were incurred during the month at a total wage cost of $55,000.

**Instructions**

Calculate the following variances for March for Riggins, Inc.

(a) Materials price variance

(b) Materials quantity variance

(c) Labor price variance

(d) Labor quantity variance

##### Ex. 205

The following direct labor data pertain to the operations of Pearce Corp. for the month of November:

Actual labor rate $12.25 per hr.

Actual hours used 18,000

Standard labor rate $12.00 per hr.

Standard hours allowed 17,100

##### Ex. 205 (Cont.)

**Instructions**

Prepare a matrix and calculate the labor variances.

Price Variance Quantity Variance

Total

Labor Variance

##### Ex. 206

The following direct materials data pertain to the operations of Wright Co. for the month of December.

Standard materials price $5.00 per pound

Actual quantity of materials purchased and used 16,500 pounds

##### Ex. 206 (Cont.)

The standard cost card shows that a finished product contains 4 pounds of materials. The 16,500 pounds were purchased in December at a discount of 4% from the standard price. In December, 4,000 units of finished product were manufactured.

**Instructions**

Prepare a matrix for materials and calculate the materials variances.

Price Variance Quantity Variance

Total

Materials Variance

##### Ex. 207

Seacoast Company provided the following information about its standard costing system for 2013:

Standard Data Actual Data

Materials 10 lbs. @ $4 per lbs. Produced 4,000 units

Labor 3 hrs. @ $21 per hr. Materials purchased 50,000 lbs. for $215,000

Budgeted production 3,500 units Materials used 41,000 lbs.

Labor worked 11,000 hrs. costing $220,000

**Instructions**

Calculate the labor price variance and the labor quantity variance.

##### Ex. 208

Lumberman Manufacturing provided the following information about its standard costing system for 2013:

Standard Data Actual Data

Materials 10 lbs. @ $4 per lbs. Produced 4,000 units

Labor 3 hrs. @ $21 per hr. Materials purchased 50,000 lbs. for $215,000

Budgeted production 3,500 units Materials used 41,000 lbs.

Labor worked 11,000 hrs. costing $220,000

**Instructions**

Determine the amount of the materials price variance. By how much will the materials price variances differ if the price variance is determined at the time of production?

##### Ex. 209

Shep Corporation estimated it would produce 6,200 buckets, though actual production was 6,000 during August. The standard labor cost is 2 buckets per hour at $18.00 per hour. Actual cost per hour was $18.40 with a total labor cost of $53,360.

**Instructions**

Determine the amounts of the labor price and the labor quantity variances for August.

##### Ex. 210

Purvis Manufacturing, which produces a single product, has prepared the following standard cost sheet for one unit of the product.

Direct materials (6 pounds at $2 per pound) $12

Direct labor (2 hours at $12 per hour) $24

During the month of April, the company manufactures 300 units and incurs the following actual costs.

Direct materials purchased and used (1,850 pounds) $4,070

Direct labor (620 hours) $7,130

**Instructions**

Compute the total, price, and quantity variances for materials and labor.